EXPOSURE DRAFT CUSTOMS AMENDMENT (CHINA-AUSTRALIA FREE TRADE AGREEMENT IMPLEMENTATION) BILL 2015 AMENDMENTS EXPLANATORY NOTE

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1 CUSTOMS AMENDMENT (CHINA-AUSTRALIA FREE TRADE AGREEMENT IMPLEMENTATION) BILL 2015 AMENDMENTS EXPLANATORY NOTE (Circulated by Senator Wong)

2 CUSTOMS AMENDMENT (CHINA-AUSTRALIA FREE TRADE AGREEMENT IMPLEMENTATION) BILL AMENDMENTS OUTLINE These amendments introduce safeguards into Australia s temporary skilled migration program to improve employment opportunities for Australian citizens and permanent residents, promote the welfare of temporary migrant workers, and facilitate compliance with occupational licensing and workplace safety regulations. The amendments will ensure that safeguards for Australian employment opportunities are maintained in response to community concerns over the impact of changes to migration arrangements contained in international trade agreements concluded by the Australian Government. The amendments reflect one of the premises of Australia s temporary skilled migration program, which is that it provides a vehicle for responding to skills shortages in the domestic labour market rather than for bypassing suitably qualified and experienced local workers. This premise is reflected in section 140AA of the Migration Act 1958 which sets out the purposes of the legislative framework for the temporary skilled migration program. The new safeguards will ensure that this premise is not undermined by work agreements entered into under the Migration Act or by Australia s international trade agreements. This will contribute to the policy objective that international trade agreements should enhance rather than constrain local economic and employment opportunities. NOTES ON AMENDMENTS Amendment 1 1. The amendments commence on the later of 1 January 2016 and the day after Royal Assent. Amendments 2 & 3 2. These amendments provide that any regulations amended by the Bill may still be amended or repealed by the Governor-General. Amendment 4 3. This amendment adds a new Schedule 3 to the Bill. Schedule 3 Migration law amendments Summary 4. This Schedule makes amendments to the Migration Act 1958 ( the Act ) and the Migration Regulations 1994 ( the Regulations ) to introduce new safeguards and extend existing safeguards in Australia s temporary skilled migration program. These safeguards are 1

3 designed to improve employment opportunities for Australian citizens and permanent residents, promote the welfare of temporary migrant workers, and facilitate compliance with occupational licensing and workplace safety regulations. 5. The Schedule s main provisions amend the Act and the Regulations to: extend obligations for approved sponsors of temporary skilled migrants to demonstrate, through labour market testing, that suitably-qualified Australian citizens or permanent residents are not available to take up job opportunities; require the Minister, when deciding whether to enter into a work agreement that authorises the employment or engagement of 457 visa holders in nominated occupations, to be satisfied of and have regard to a number of matters; provide that the Minister may impose, vary or revoke conditions on work agreements and may suspend or terminate work agreements; increase the temporary skilled migration income threshold to $57,000 for the financial year and provide for indexation of the Threshold in subsequent years to maintain its value in real terms; extend the operation of the temporary skilled migration income threshold so that it applies to employment of 457 visa-holders engaged under work agreements, as well as those engaged by standard business sponsors; require the Minister to maintain a register of work agreements and to report to Parliament on the operation and impact of work agreements; and impose additional criteria and conditions for subclass 457 visa applicants and visa holders in relation to occupations where it is mandatory to hold a particular licence, registration or membership. Background 6. Division 3A Part 2 of the Act establishes a framework for temporary sponsored work visas and allows Australian employers to become approved sponsors of temporary skilled migrants. 7. Under section 140GB of the Act only an approved sponsor may nominate an applicant for a temporary sponsored work visa. The term approved sponsor is defined in subsection 5(1) of the Act as: a) A person approved as a standard business sponsor under section 140E of the Act in relation to a visa class prescribed by the Regulations. This is the general stream for sponsored work visas in Australia which would be used, for example, by an Australian business to sponsor a skilled foreign worker to work temporarily in Australia in a field where there is a local skills shortage; or b) A person (other than the Minister) who is party to a work agreement. A work agreement is a formal arrangement negotiated between an employer and the Minister which provides for the employer to recruit temporary skilled migrants. Work agreements typically specify numbers of skilled workers needed from outside Australia, occupations, skill and English language requirements. They provide a second stream for sponsored work visas in Australia. 2

4 8. A number of different categories of work agreements have been made available by the Australian Government, including Designated Area Migration Agreements, Enterprise Migration Agreements, Project Agreements and Meat Industry Labour Agreements. The Australian and Chinese Governments have also recently concluded a Memorandum of Understanding on an Investment Facilitation Arrangement which provides for work agreements to be available to employers on Investment Facilitation Arrangement projects. Although work agreements are provided for in the statutory framework for temporary skilled migration, the procedures and requirements for negotiating these agreements and their content are largely a matter of Ministerial discretion and Government policy rather than legislative regulation. 9. The Subclass 457 (Temporary Work (Skilled)) visa is a visa subclass that employers can use to sponsor temporary skilled migrants to work in Australia. The Subclass 457 visa is established in Schedule 2 to the Regulations. The criteria and process for the Minister to approve a Subclass 457 visa are prescribed by regulations 2.72 and The general requirements for nomination approval for visa applicants from both the standard business sponsor and work agreement streams are set out in subregulations 2.72(3) to (9). The specific criteria for applicants nominated by a standard business sponsor are set out in subregulations 2.72(10), (10AA), (10AB) and (10A). Subregulations 2.72(11) and (12) set out the criteria specific to applicants nominated by a party to a work agreement. 11. The criteria for nominating an applicant through the work agreement stream are less prescriptive, reflecting the fact that much of the detail of a work agreement is subject to negotiations between the employer and the Australian Government. 12. Under paragraph 2.72(10)(cc) of the Regulations, for a standard business sponsor nomination of a Subclass 457 visa to be approved, the Minister must be satisfied that the base rate of pay of an Australian citizen or permanent resident, performing equivalent work at the same location, would be greater than the temporary skilled migration income threshold. Under paragraph 2.72(10)(c), the Minister must be satisfied that the visa applicant s terms and conditions of employment are no less favourable than that of an Australian citizen or permanent resident performing equivalent work at the same location. The temporary skilled migration income threshold is specified by the Minister in a legislative instrument made for the purposes of paragraph 2.72(10)(cc) of the Regulations. The temporary skilled migration income threshold is currently $53, An approved sponsor nominating an applicant under the standard business sponsor stream must also satisfy the labour market testing condition. The labour market testing condition is set out in section 140GBA of the Act. This condition requires the employer to test the local labour market and demonstrate that a suitable local worker is not readily available to fill the position. The required evidence must include information about the employer s attempts to recruit local workers and may also include research on labour market trends among other things. 3

5 Amendments Items 1 & 2 Subsection 5(1) & subsection 5(1) (definition of work agreement) 14. These items insert new definitions into the Act s interpretation provision and repeal the existing definition of work agreement and replace it with a new definition. The new provisions define terms used in the amendments to the Act. Item 3 Paragraph 140GBA(1)(a) 15. Section 140GBA of the Act imposes a labour market testing condition on nominations of temporary skilled migrants by approved sponsors who are in a class of sponsors prescribed by the Regulations. The class of sponsors which is currently prescribed by the Regulations for this purpose is standard business sponsors (regulation 2.72AA). Item 3 amends paragraph 140GBA(1)(a) to add employers who are parties to work agreements to the approved sponsors who are subject to the labour market testing condition. The effect of this amendment is to extend the Act s labour market testing condition to employers who are parties to work agreements. This reflects existing Government policy requiring employers who are party to work agreements such as Project Agreements to ensure local workers are provided first opportunity for employment, prior to the recruitment of overseas workers. Item 4 Sections 140GC, 140GD, 140GE and 140GF 16. This item repeals section 140GC and substitutes new sections 140GC, 140GD, 140GE and 140GF dealing with work agreements and the temporary skilled migration income threshold. 17. As noted above, while the current statutory framework provides for work agreements, the procedures and requirements for negotiating these agreements and the content of these agreements are currently largely a matter of Ministerial discretion and Government policy rather than legislative regulation. The new section 140GC modifies this approach by defining work agreements and by setting out matters of which the Minister must be satisfied before entering into a work agreement. The intention is that the Act should prescribe a number of requirements for work agreements requirements which reflect existing Government policy while also maintaining considerable flexibility and Ministerial discretion over whether to enter a work agreement and the content of work agreements. 18. New subsection 140GC(2) provides that the Minister must not enter into a work agreement unless satisfied that the base rate of pay for the 457 visa holders will be greater than the temporary skilled migration income threshold. The subsection also provides that in deciding whether to enter into a work agreement, the Minister must have regard to: the extent to which the work agreement will support or create jobs for Australian citizens or permanent residents; a statement provided by the employer (the sponsor party) showing a labour market need to utilize temporary skilled migrants; a training plan developed by the employer; whether an appropriate proportion of the temporary skilled migrants will be able to assist in training Australian citizens or permanent residents; an overseas worker support plan developed by the employer; and 4

6 any other matters the Minister considers relevant. 19. New subsections 140GC(3) to (8) provide further details about the matters the Minister must consider under new subsection 140GC(2). 20. New subsection 140GC(3) provides that the Minister may determine by legislative instrument that the requirement in paragraph 140GC(2)(a) for the base rate of pay to be greater than the temporary skilled migration income threshold does not apply to individual work agreements or to classes of work agreements. The intention is to provide the Minister with the ability to determine that more flexibility is justified in the circumstances of a particular work agreement or class of work agreements, such as work agreements tailored to particular industries or locations. The Minister would be expected to utilize this provision relatively infrequently, where he or she formed the view that there were countervailing benefits from entering into such work agreements. 21. New subsection 140GC(4) provides that in considering whether a work agreement will support or help create jobs for Australian citizens or permanent residents, the Minister is to have regard to a range of factors including the work agreement s likely direct and indirect impacts on employment, training opportunities and economic activity, and the condition of the national and local labour markets. 22. New subsection 140GC(5) includes details about the statement of labour market need. Statements of labour market need are expected to contain information and analysis demonstrating that there is a labour market need for the employer to seek to utilize temporary skilled migration. These statements would be expected to include: evidence of ongoing shortages and difficulties recruiting skilled workers which have created the need to seek temporary skilled migrants; a workforce profile providing information on numbers and occupations of persons employed and expected to be employed by the sponsor party; and a workforce strategy outlining how the sponsor party is attempting to source local workers, whether it has participated in any government programs or strategies to assist unemployed or retrenched workers, and what actions it will take to reduce reliance on temporary migrants in the future. The concept of a statement of labour market need draws on existing government policy as set out in the Department of Immigration and Border Protection s guidelines and information for employers on Project Agreements (a category of work agreements). 23. New subsection 140GC(6) provides details about training plans. Training plans are expected to contain information on occupations where employers face skills shortages and on training that will be provided to address these shortages. They may include details of training targets for the period that the proposed work agreement will be in place, such as numbers of apprentices or trainees to be engaged, numbers of employees to be provided with on or off the job training, and levels of expenditure on internal and external training activities. The concept of training plans draws on government policy on training commitments required for employers entering Project Agreements and Meat Industry Labour Agreements (categories of work agreements). 5

7 24. New subsection 140GC(7) sets out matters which employers would be expected to include in overseas worker support plans. The intention is that these plans should ensure temporary skilled migrants are supported during their stay in Australia, are not vulnerable to exploitation, mistreatment or isolation in the workplace or the community, and have access to appropriate information and support services from both the employer and external entities. The primary responsibility for providing and facilitating this kind of support is expected to rest with the employer. Accordingly, the Minister is required to have regard to an overseas worker support plan developed by the employer. The concept of an overseas worker support plan draws on existing Government policy which requires companies entering Project Agreements to provide details of how they propose to support employers and overseas workers and facilitate the integration of overseas workers in their local communities. Government policy requires similar overseas worker support requirements to be adopted under Designated Area Migration Agreements. 25. New section 140GD provides that the Minister may impose conditions on a work agreement including that a minimum number or percentage of Australian citizens or permanent residents will be employed or that a maximum number or percentage of 457 visa holders will be employed or engaged. This provides the Minister with a legislative basis for imposing such conditions, which are currently provided for in Government policy for certain categories of work agreements, including Designated Area Migration Agreements, Project Agreements and Meat Industry Labour Agreements. The conditions may be expressed in terms of numbers or percentages of the relevant employees. For example the Minister could impose a condition that a minimum percentage of all employees on a project or operation covered by a work agreement shall be Australian citizens or permanent residents. The section also provides that the Minister may vary or revoke conditions, that sponsor parties must comply with any conditions imposed and that the Minister may suspend or terminate work agreements where he or she believes there has not been compliance with a condition. 26. New section 140GE provides that the temporary skilled migration income threshold will be $57,000. This amount would apply upon commencement of the amendments. New section 140GF provides that the temporary skilled migration income threshold will be indexed each financial year in line with movements in the Average Weekly Ordinary Time Earnings. These provisions are intended to set the level of the temporary skilled migration income threshold directly in the Act rather than through the current mechanism where its level is specified by the Minister through a legislative instrument for the purposes of paragraph 2.72(10)(cc) of the Regulations. The temporary skilled migration income threshold has not been increased since June 2013, which means its value has declined in real terms. New section 140GE will restore its real value, by increasing the threshold in line with increases in Average Weekly Ordinary Time Earnings over 2013 and New section 140GF will maintain that real value in the future by providing for annual indexation of the threshold according to increases in estimates of Average Weekly Ordinary Time Earnings published by the Australian Statistician, New subsection 140GF(4) is intended to ensure that this indexation calculation utilises the first estimate published by the Statistician for the relevant period, rather than any subsequent estimates or revised estimates published for that period. Providing a legislated mechanism for indexing the temporary skilled migration income threshold will ensure it continues to be an effective safeguard in the temporary skilled migration system and will provide greater certainty and predictability about regulatory arrangements for temporary migration. 6

8 28. The temporary skilled migration income threshold is an important safeguard in temporary migration system. It is designed to ensure that 457 visas are used to fill skilled positions rather than unskilled or entry-level positions. It also helps ensure that 457 visa holders have enough income to support themselves and their dependents while they are in Australia, and avoids the potential exploitation of these workers by providing support for Australian wages and conditions. These amendments strengthen the role of the temporary skilled migration income threshold by: applying the requirement for the base rate of pay to exceed the threshold to 457 visa-holders engaged under work agreements, as well as those engaged by standard business sponsors (new paragraph 140GC(2)(a)); increasing the current value of the threshold (new section 140GE); and providing for indexation of the threshold (new section 140GF). Item 5 At the end of Subdivision H of Division 3A of Part This item adds a new section 140ZL requiring the Minister to keep a register of work agreements and a new section 140ZM requiring the Minister to table a report in each House of Parliament providing information about the operation and impact of work agreements during each financial year. The information to be included in the report includes: numbers of work agreements in effect and entered into; details of conditions imposed on work agreements; details of sponsorship obligations or visa criteria varied by work agreements; numbers and occupations of Australian citizens or permanent residents and 457 visa holders employed under work agreements; and information about compliance and enforcement activities in relation to the administration of Division 3A of Part 2 of the Act. 30. Examples of the kinds of sponsorship obligations or visa approval criteria which may be varied by work agreements, and which are to be reported on, include English language proficiency requirements and skill levels required for 457 visa workers. This reflects the scope available under work agreements for the Minister to negotiate with sponsor parties for concessions or variations to the Act s requirements in relation to skills, qualifications, employment background and level of English language proficiency required for the nomination and grant of a subclass 457 visa. 31. The report required under new section 140ZM is to be tabled in respect of each financial year and within three months of the end of each financial year. The intention of this new section is to ensure Parliament and the community are provided with more information about work agreements to facilitate Parliamentary scrutiny and public discussion of the administration of the temporary skilled migration system. Migration Regulations 1994 Items 6 & 7 Regulation 1.03 and subregulation 2.57(1) 32. These items repeal the definitions of labour agreement and base rate of pay contained in the regulations. The amendments insert definitions in subsection 5(1) of the Act (see item 1). Item 8 Paragraph 2.72(10)(cc) 33. This item omits part of paragraph 2.72(10)(cc) providing that the temporary skilled 7

9 migration income threshold be specified by the Minister in a written instrument. This reflects the operation of new sections 140GE and 140GF which establish the temporary skilled migration income threshold directly in the Act. Item 9 Regulation This item repeals Regulation 2.76 which prescribes requirements for work agreements. The amendments incorporate these requirements into subsection 5(1) and new subsection 140GC(1). Item 10 After paragraph (2)(d) 35. This item inserts a new paragraph creating an additional criterion to be satisfied by applicants for 457 visas. The criterion applies to applicants seeking 457 visas under labour agreements in occupations where it is mandatory in Australia to hold a licence, registration or membership in order to perform the occupation. It requires the applicant either to hold the relevant licence, registration or membership and provide the Minister with a copy, or to demonstrate that he or she can meet the requirements for obtaining the licence, registration or membership. This criterion will ensure 457 visa applicants under labour agreements obtain the relevant licence, registration or membership which is required under the applicable federal, state or territory regulation. It is intended to strengthen occupational skills and safety standards, improve coordination between federal, state and territory authorities, and minimise the risk of 457 visa holders working without holding the appropriate occupational licence or certification. Applicants will need to either provide the Minister with a copy of the relevant licence, registration or membership at the time of applying for a visa or to demonstrate that they can obtain such a licence, registration or membership if a visa is granted. This will provide flexibility for visa holders to obtain a licence, registration or membership after their arrival in Australia, where they have demonstrated that they meet the relevant skills, experience and other requirements for obtaining a license, registration or membership. Item 11 After paragraph (4)(e) 36. This item inserts a new paragraph creating an identical criterion to that created by Item 11 for 457 visa applicants sponsored by approved sponsors under the standard business sponsor stream of the temporary skilled migration program. It is intended to strengthen occupational skills and safety standards, improve coordination between federal, state and territory authorities, and minimise the risk of 457 visa holders working without the appropriate occupational licence, registration or membership. Item 12 Paragraph 8107(3)(c) of Schedule This item repeals paragraph 8107(3)(c) and substitutes a new paragraph 8107(3)(c) which creates additional visa conditions for 457 visa holders nominated for occupations where it is mandatory to hold a licence, registration or membership in Australia. The new conditions are intended to strengthen the conditions in the existing paragraph 8103(3)(c). The existing conditions require such visa holders to hold any relevant licence, registration or membership and to comply with any conditions or requirements imposed on the licence, registration or membership. The new conditions require such visa holders: not to perform the occupation until they hold the licence, registration or membership; to hold the license, registration or membership within 60 days after arriving in Australia; 8

10 to provide the Department with documentation of the licence, registration or membership, including any conditions or requirements, before performing the occupation; to comply with any conditions or requirements imposed on the licence, registration or membership; not to engage in work that is inconsistent with the licence, registration or membership or with any conditions or requirements imposed on the licence, registration or membership; and to notify the Department of any changes to the licence, registration or membership or to any conditions or requirements imposed on the licence, registration or membership. 38. These strengthened conditions are intended to ensure that such visa holders not only hold the relevant licence, registration or membership but do so within 60 days of arrival and do not perform the occupation until they hold the licence, registration or membership. The strengthened conditions also require visa holders to provide the Department with documentary evidence of their licence, registration or membership before they commence working in the relevant occupation. Such documentation is to include any conditions or requirements. An example of such a condition or requirement would include being issued with a provisional licence requiring work to be performed under supervision or requiring the visa holder to undertake further training. The 60-day time limit for obtaining a licence, registration or membership and the requirement to provide documentation to the Department, are designed to minimise the risk of unlicensed persons performing work in such occupations. By requiring the documentation to be provided to the Department as a visa condition, the ability of the Department to monitor and enforce compliance with relevant occupational skills and workplace safety standards will be improved. The conditions also make it clear that visa holders must not perform work which is inconsistent with the licence, registration or membership and require the visa holder to notify the Department of any changes to their licence, registration or membership or any conditions or requirements to which it is subject. Item 13 Application 39. This item provides that the amendments made by Schedule 3 apply in relation to work agreements which are entered into on or after the day on which the items commences. This ensures the amendments will apply prospectively, to new work agreements, but not retrospectively to work agreements which have been entered into before the commencement. 9

11 Statement of Compatibility with Human Rights Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 CUSTOMS AMENDMENT (CHINA-AUSTRALIA FREE TRADE AGREEMENT IMPLEMENTATION) BILL AMENDMENTS These amendments are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act Overview of the Amendments The amendments introduce safeguards into Australia s temporary skilled migration program to improve employment opportunities for Australian citizens and permanent residents, promote the welfare of temporary migrant workers, and to facilitate compliance with occupational licensing and workplace safety regulation. The amendments will ensure that safeguards for Australian employment opportunities are maintained in response to community concerns over the impact of changes to migration arrangements contained in international trade agreements concluded by the Australian Government. The amendments reflect one of the premises of Australia s temporary skilled migration program, which is that it provides a vehicle for responding to skills shortages in the domestic labour market rather than for bypassing suitably qualified and experienced local workers. The new safeguards will ensure that this premise is not undermined by work agreements entered into under the Act or by Australia s international trade agreements. This will contribute to the policy objective that international trade agreements should enhance rather than constrain local economic and employment opportunities. Human rights implications The amendments engage the following human rights: the right to work; and the right to just and favourable conditions of work. The right to work The amendments engage the right to work as contained in Article 6 of the International Covenant on Economic, Social and Cultural Rights. Article 6(1) provides that parties to the Covenant recognise the right to work, including the right of everyone to the opportunity to gain their living by work which they freely choose or accept, and will take appropriate steps to safeguard this right. The amendments engage this right by strengthening labour market 10

12 safeguards in Australia s temporary skilled migration system which will require opportunities to work to be offered initially to Australian citizens or permanent residents. Australia s temporary skilled migration system also engages the right to work of overseas citizens by providing a framework for the use of temporary skilled migration where there are skills shortages in the Australian labour market. The right to just and favourable conditions of work The amendments engage the right to just and favourable conditions of work as contained in Article 7 of the International Covenant on Economic, Social and Cultural Rights. Article 7 provides that parties to the Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work which ensure, amongst other things, fair wages and safe and healthy working conditions. The amendments engage this right by making new arrangements for setting the level of the temporary skilled migration income threshold, by requiring employers entering work agreements for the use of temporary skilled migrants to adopt overseas worker support plans and by strengthening compliance with Australia s workplace skills and safety regulation. Conclusion The amendments are compatible with human rights because they engage and advance the human rights to work and to just and favourable conditions of work. (Circulated by authority of Senator Wong) 11