National Farmers Federation

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1 National Farmers Federation Submission to the 457 Programme Temporary Skilled Migration Income Threshold (TSMIT) 8 March 2016 Page 1

2 NFF Member Organisations Page 2

3 The National Farmers Federation (NFF) is the voice of Australian farmers. The NFF was established in 1979 as the national peak body representing farmers and more broadly, agriculture across Australia. The NFF s membership comprises all of Australia s major agricultural commodities across the breadth and the length of the supply chain. Operating under a federated structure, individual farmers join their respective state farm organisation and/or national commodity council. These organisations form the NFF. The NFF represents Australian agriculture on national and foreign policy issues including workplace relations, trade and natural resource management. Our members complement this work through the delivery of direct 'grass roots' member services as well as state-based policy and commodity-specific interests. Contact details Queries should be directed to: Sarah McKinnon Manager, Workplace Relations & Legal Affairs Phone: Media inquiries should be directed to: Stacey Wordsworth Phone: Page 3

4 Statistics on Australian Agriculture Australian agriculture makes an important contribution to Australia s social, economic and environmental sustainability. Social > There are approximately 115,000 farm businesses in Australia, 99 percent of which are family owned and operated. Each Australian farmer produces enough food each year to feed 600 people, 150 at home and 450 overseas. Australian farms produce around 93 percent of the total volume of food consumed in Australia. Economic > The agricultural sector, at farm-gate, contributes 2.4 percent to Australia s total Gross Domestic Product (GDP). The gross value of Australian farm production in was $51 billion a 6 percent increase from the previous financial year. Yet this is only part of the picture. When the vital value-adding processes that food and fibre go through once they leave the farm are added in, along with the value of all economic activities supporting farm production through farm inputs, agriculture s contribution to GDP averages out at around 12 percent (over $155 billion). Workplace > The agriculture, forestry and fishing sector employs approximately 323,000 employees, including owner managers (174,800) and non-managerial employees (148,300). Seasonal conditions affect the sector s capacity to employ. Permanent employment is the main form of employment in the sector, although more than 40 per cent of the employed workforce is casual. Overseas workers are an important part of the Australian agricultural workforce. Approximately 40,000 working holiday makers, 3,000 Seasonal Worker Program participants and up to 2,100 skilled temporary migrants work on Australian farms each year: almost one-third of the total (non-managerial) workforce. Environmental > Australian farmers are environmental stewards, owning, managing and caring for 52 percent of Australia s land mass. The NFF was a founding partner of the Landcare movement, which in 2014, celebrated its 25 th anniversary. Farmers are at the frontline of delivering environmental outcomes on behalf of the Australian community, with 94 percent of Australian farmers actively undertaking natural resource management. Page 4

5 Contents Statistics on Australian Agriculture... 4 Contents... 5 Executive Summary Introduction The Temporary Skilled Migration Income Threshold (TSMIT) Addressing the Particular Circumstances in Regional, Rural and Remote Australia Other Relevant Issues Summary of Recommendations Page 5

6 Executive Summary Overseas workers play a small but important part in the Australian agriculture sector. Many agricultural industries are characterised by seasonal work, harvesting perishable goods destined for domestic and international markets. These industries are commonly located in regional or remote areas where demand for labour is high during peak seasons and labour supply is limited. In mixed farming operations such as the cotton industry, overseas workers are employed for whole-of-farm operations, both during the busy growing season when planting, fertilising and irrigation are done as well as during quieter times of the season when farm repairs and maintenance and other non-time critical work can be undertaken. Allowing the agriculture sector to respond effectively to labour shortages through access to overseas workers is hugely important it means that what is grown can be harvested and sold, not left to perish. Australian agriculture needs policies and programs that drive growth and boost on-farm profitability and competitiveness. In our submission to the Agricultural Competitiveness White Paper, the NFF called for measures to boost the availability of foreign labour in regional areas by supplementing existing migration policy solutions to agricultural labour shortages. The Australian agriculture sector experiences key disadvantages in accessing skilled workers in the 457 visa programme, including through the application of the TSMIT which is a significant barrier to eligibility. This submission outlines the experience of the agriculture sector in relation to the 457 visa programme, and in particular how revision of the TSMIT in its application to regional, rural and remote Australia can support a more skilled agricultural workforce. Note: Australian Dairy Farmers and Australian Pork Limited are NFF Members but have not endorsed the reintroduction of a regional concessions framework as outlined in this submission. Page 6

7 1. Introduction The Australian agriculture sector is a source of economic strength. There are approximately 130,000 farm businesses in Australia; 99 percent of these are family owned and operated. In the three years to 2013, Australian farms exported almost two-thirds of their food and fibre to the world. Recent data from the Australian Bureau of Statistics indicates that farm and fisheries production and processing accounts for approximately 2.4 per cent of Australia s gross domestic product and 16 per cent of the total value of merchandise trade exports. The value of Australian agricultural output currently sits at $50.8 million. The agricultural workforce has a number of features that make it unique, including: a relatively high level of seasonal, casual and contract labour (including harvest labour); a wide geographical spread, with much of the work occurring in regional rural areas; a high proportion of older workers; workers from a wide range of cultural backgrounds; comparatively low levels of formal education, including literacy and numeracy in certain occupation groups and industry subsectors; a range of ownership structures, including owner operators, family business models, sovereign wealth funds and multinationals; and a high concentration of small and medium enterprises (SMEs). The skills of people working in agriculture vary from formal qualifications, to skills learnt on-farm and developed through significant experience. These people are farm owners and family members, share farmers, itinerant farm labourers, local casual workers, students, travelling retirees, skilled migrants, backpackers and overseas workers in Australia for a short time to improve their lives back home. The seasonal nature of agriculture, limited year round cash flow distance from urban centres all make it difficult to attract and a steady workplace. The total number of 457 visa holders in Australia at 31 December 2015 was Only 1.5% or 330 of the applications granted in were in the agriculture, forestry and fishing industry. 2 Victoria received the largest share (90) and New South Wales was close behind (80). 3 1 Subclass 457 Quarterly Report 31 December 2015, Australian Government Department of Immigration and Border Protection. 2 Ibid. 3 Ibid. Page 7

8 2. The Temporary Skilled Migration Income Threshold (TSMIT) The TSMIT provides an income floor for 457 visa holders and was designed to ensure that these workers can support themselves while working in Australia. Skilled occupations that do not meet the TSMIT are ineligible under the 457 visa programme. In light of current workforce shortages in Australia, the NFF considers the current TSMIT framework to be prohibitive in some circumstances. The introduction of market salary rates and training benchmarks in 2009 created a barrier to use of the 457 visa programme for members in regional areas whose skilled workers are paid market salary rates below the TSMIT or the English Language Salary Exemption Threshold. Calculation of the TSMIT and Indexation The original TSMIT set in 2009 was based on the Minimum Salary Level (MSL) used in the 457 programme at the time. The MSL was based on a seasonally adjusted average of Average Weekly Ordinary Time Earnings (AWOTE) for all employees produced by the Australian Bureau of Statistics (ABS). The TSMIT has since been indexed annually in accordance with increases in the average weekly earnings published by the ABS. A one size fits all threshold pays insufficient account of market variances in rural and regional Australia. In many remote areas of Australia the employer is the only employer in the region: they set their own market rates. Those employers pay at least the applicable Modern Award or Enterprise Agreement rate. In many cases, salaries include a range of non-monetary benefits which may or may not be counted for the purposes of the TSMIT, depending on the interpretation of migration law adopted by the Department of Immigration and Border Protection in a particular case. Automatic indexation of the TSMIT using the current AWOTE method does not take into account actual labour market conditions, which vary. To the extent that there is any indexation, the NFF considers that it ought to be based on the Wage Price Index as this provides information on price changes related to changes in actual rates of pay (for example, due to changes in awards), rather than changes in the quantity of work performed (for example, hours worked) or changes in the quality of work performed (for example, due to the job occupant obtaining higher skills). It is based on a full time wage estimate, while the AWOTE index, relies on gross weekly figures with no reference to how many hours are worked each week. The agriculture industry does not conform to standard operating hours. Rather, hours vary according to the seasons, weather, market demand and other emergencies that may arise when working with plants and animals. Throughout the year workloads can vary, with periods of peak labour requirements interspersed with periods of low demand. Overtime is a feature of the industry, increasing total annual salaries in a way that is not always reflected in the Page 8

9 calculation of the TSMIT. This is because as a starting point, the TSMIT is applied to the base rate of pay, defined as the rate of pay for ordinary hours of work, but not including incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates and any other separately identifiable amounts. Agricultural salaries often include non-monetary benefits such as accommodation, food, the use of motor vehicles etc. Again, these are not reflected in the calculation for assessing whether the industry meets the TSMIT, yet they reduce the monetary burden on the employer and employee and enhance their capacity to meet the underlying objective of the TSMIT - to ensure that a visa holder has a reasonable means of support whilst in Australia and is able to meet costs during their period of stay. Workers who come to Australia under the subclass 457 visa programme are covered by the Fair Work Act 2009 and respective modern awards or enterprise agreements, which together provide for relevant and appropriate Australian terms and conditions of employment. The NFF believes that for skilled workers covered by a modern award or enterprise agreement, wage rates set by that award or agreement should be capable of satisfying the TSMIT in regional areas where the TSMIT does not reflect relevant market salary rates. Alternatively, a regional concessions framework should be introduced to facilitate access to 457 visa workers where regional salaries sit below the Threshold. 3. Addressing the Particular Circumstances in Regional, Rural and Remote Australia Employers in regional Australia are no longer eligible for concessions in meeting the minimum salary and skills requirements for the nominated position under the subclass 457 Visa program. Given the difficulty that regional and rural employers face recruiting local people with relevant skills and attracting skilled people to remote areas, NFF believes that some concessions should be reintroduced to address acute skills requirements in regional areas. The current uptake of the 457 visa programme in regional, rural and remote areas is limited, with only 1.5% of applications granted in the current financial year to the agriculture, forestry and fishing industry. This is despite the shortage of a skilled workforce in the industry and is due in part to the fact that industries must meet the TSMIT to be eligible for access to the 457 visa programme. Prior to 2009, migration policy supported a regional concessions framework in the order of 10 per cent. The regional concessions framework was removed from 14 September 2009 after Ms Barbara Deegan, tasked with reviewing the 457 visa framework, concluded that: Page 9

10 Where a regime of market rates is mandated for payment of the visa holders there is no need for any specific regional concession. If occupations not included on the lists of skilled occupations (e.g. semi-skilled occupations) are accessed only by means of a Labour Agreement, regional considerations can be addressed through that mechanism. 4 This finding ignores the extraordinary red tape and regulatory burden imposed by the requirement to negotiate labour agreements. In our observation, the process is extremely resource intensive. The reintroduction of a regional concessions framework is important, if for no other reason than to convey to the Department of Immigration and Border Protection that concessions are appropriate in certain circumstances. Such a regime would be open, transparent and maintain a level of income to support visa holders sufficiently, so that the TSMIT is applied fairly between the employer and employee. 4. Other Issues Public Communication Strategies Noting the recent improvements to the Department of Immigration and Border Protection website, we continue to press for information on visa access, eligibility and salary thresholds to be easily accessible on the Department s website. Fact sheets and flow charts explaining the different aspects of the 457 visa eligibility and approval process would be beneficial as would a designated section within the department with the capability to provide a more efficient application process. ANZSCO Skill Levels A key barrier to access to the 457 visa program is the ANZSCO list. Many, if not most, skilled agricultural roles and related qualifications are currently not captured or recognised within ANZSCO, which was never intended for use in migration policy and is out of date. As a result there are considerable limitations within the ANZSCO system that impact on a wide range of labour market and migration initiatives. At the heart of these is a lack of capacity to respond to the changing needs of industry. Workers with relevant skills are ineligible for 457 visas because they are not on the list or because they have generic, rather than industry-specific, qualifications. This has resulted in fewer skilled migrants working in regional areas and more farmers frustrated at the amount of time and money spent trying to sponsor skilled workers, who they know can do the job, to no avail. Key skilled agricultural occupations that should be eligible for 457 visas, but are not, include Farmhand/Senior Farmhand, Farm Overseer, Farm Production Manager, Senior Stock Person and Irrigation Supervisor. See also the attached 4 Visa Subclass 457 Integrity Final Report October Page 10

11 paper prepared in 2011 by Dr Rochelle Ball and Mark Cody for the Primary Industries Skills Council, which among other things, identifies current shortcomings in the approach to recognition of prior learning or experience as well as agricultural occupations that were literally lost in translation between the Australian Standard of Classification of Occupations (ASCO) and ANZSCO. Skilled agricultural occupations must be put on the list used to determine eligibility for the 457 visa program as a matter of priority. This single initiative would negate the need for labour agreements for most agricultural employers in Australia. Embedding the TSMIT in the Migration Act 1958 The NFF is concerned that embedding the TSMIT in the Migration Act 1958 rather than in regulations limits capacity for adjustments as appropriate. It also increases the risk of the TSMIT becoming a political football where issues of overseas workers competing with Australian workers are in focus, such as happened recently in relation to the China Free Trade Agreement. In our submission, the TSMIT should remain in the regulations in its current form, subject to the recommendations set out above. 5. Summary of Recommendations In summary, the NFF recommends: The TSMIT remain in the Migration Regulations There be no automatic indexation of the TSMIT; If there is to be indexation, it should be based on the Wage Price Index; When calculating the TSMIT, the following matters be taken into account: o guaranteed overtime; o guaranteed over-award payments; and o non-monetary benefits attached to the employment; A regional concessions framework should be reintroduced; and Skilled agricultural occupations be put on the list used to determine eligibility for the 457 visa program as a matter of priority. Page 11

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