Changes needed to make Australian work scheme work

Transcript

There are calls for changes to Australia's Pacific seasonal work scheme if it is to achieve its intended aim of providing work for up to 40,000 people.

An assessment done jointly by the Australian National University and the World Bank has found too many of the jobs are going to back packers, that there are excessive compliance costs and that the workers need to pay a greater share of costs such as transport.

The ANU's Professor Stephen Howes, the director of the Development Policy Centre, told Don Wiseman they have surveyed farmers and reforms would lift employer demand.   

STEPHEN HOWES: It's been going for a while now, since 2008, and whereas the New Zealand scheme went from 5,000 up to 8,000 and is now capped at 9,000 the Australian scheme is now just a couple of thousand, I think we're expecting about 2-and-a-half thousand this this year. So it's a stark contrast especially when you consider that the Australian horticultural sector is actually much bigger than the New Zealand sector, yet our take-up of a very similar scheme for bringing over Pacific Island workers has been much lower.

DON WISEMAN: The oddity with that is that when it was first mooted the Australian farming groups we spoke with were very enthusiastic about this idea. So have they changed, or is it something else?

SH: Yeah, that's right, that's a very interesting historical story. There was a lot of talk about a labour shortage, so what's happened to that shortage? We went out and asked a couple of hundred employers -- both those using the scheme and not using the scheme as well as industry associations and a pretty clear picture emerges and I think the first part of that picture is that there just isn't an aggregate labour shortage in the agricultural sector, and there are two reasons for that, and the biggest is a single word; backpackers. There are many more backpackers now coming to Australia and there are many more backpackers now working in horticulture and that's because the government has given this incentive that if you work on a farm for three months you can get a visa for a second year. And there are now some 40,000 backpackers taking advantage of that and the Pacific seasonal workers in general simply can't compete with the backpackers.

DW: You've completed this report, it's done in conjunction with the World Bank. What do you think needs to happen to make this work better?

SH: Yeah that's right, as you know the World Bank has been involved in both the Australian and New Zealand schemes since their inception. So they were also interested to know why the scheme wasn't doing better in Australia, and we've had a research interest in the scheme from the start. So we asked employers, 'what are the reforms that would make the scheme more attractive?'. So leaving aside the issue of the backpackers, because that's beyond the scheme, the things they pointed to were around cost sharing -- they would like to shift more the of the cost to Pacific seasonal workers, for example in terms of international and domestic travel costs, especially for returning workers they think they could bear those costs. And we think that's reasonable, because if you ask a Pacific Islander, in general, they would much rather come to Australia than New Zealand, I mean our minimum wage here is much higher than in New Zealand so it is a more financially lucrative scheme here in Australia for workers so the real challenge is to grow the scheme, and to do that you've got to change the balance a bit and shift some of the costs on to the seasonal workers so it's slightly less attractive for them, but we'll have many more coming. And then there's a whole range of things around reporting requirements and red tape; you have to set up superannuation accounts for the workers which are then depleted at the end of their assignment, it doesn't make any sense. So there are a range of regulatory things that the employers told us the government could do to make the scheme more attractive. I mean, I want to point out that it's not all doom and gloom, we don't think the scheme should be scrapped. It is growing by about 500 a year and those employers who use it generally rate it above average or excellent, and they rate seasonal workers as much better workers than either backpackers or locals. So there clearly is a base on which to build, but something has to be done about backpackers and what we recommend is that if you want to keep that second year visa, make it available for any three months of work. At the moment it's restricted to farm work or things like construction, which are hardly ever done. Just open it up to the tourism sector as well and then try to address the issues of high cost and the regulatory burden of the scheme.

DW: Some of those features don't exist in the New Zealand scheme, I think, there's not the same degree of red tape is there? For instance...

SH: Ah that's right, as I understand it, you simply don't have to pay superannuation at all to these workers, whereas we have this really farcical situation where you pay into a superannuation account and then that's drawn down several months later.

DW: And in addition I think the workers in New Zealand also contribute to the air fares, and they've always done that.

SH: That's right, it's also true in Australia, they do contribute. Basically, we're saying that because the minimum wage is so much higher in Australia and it's so much more lucrative in Australia, we think they can take a higher share of the international costs, in the Australian case than in the New Zealand case.

DW: Given that New Zealand's taking three times the number that Australia is taking at this point, what do you imagine would be an optimum level in Australia?

SH: Well actually more than three times you're taking at the moment. But the World Bank has put forward 40,000 as a number for Australia, given what New Zealand is able to attract and given the relative size of the two economies. So that's really an order of magnitude change. At the moment, simply increasing by the order of 500 every year it may be reaching 5,000 in a few years and you're going to leave the scheme, you know a nice scheme, but peripheral if not irrelevant. To make it a relevant scheme both for Australian horticulture and Pacific development we need to get at least above the 10,000 mark.

DW: If you had, say, 40,000 plus the ones coming to New Zealand. The impacts on the various economies would be really significant wouldn't it.

SH: Well that's right, you have to go beyond Samoa and Tonga and that's one of the ironies of the Australian scheme is that the biggest group of workers comes from Tonga which already has a good flow of remittances flowing in. So we need to look at Melanesia, at Vanuatu and then beyond that at Solomon Islands and PNG and Fiji's coming back into the scheme. So if we look at Melanesia, the Pacific can find that number of workers, but clearly we can't just rely on Tonga and Samoa for those sorts of numbers.