06 June 2016
by Adele Ferguson
ChAFTA has opened door to unqualified workers
The Chinese Free Trade Agreement will proceed after Labor and the Coalition reach agreement on safeguards for jobs.
Earlier this year seven Chinese workers in their 50s, clutching freshly minted passports, visas and letters inviting them to Australia weaved their way through Melbourne airport, searching frantically for their onshore contact.
Bundled into a minivan, after leaving an ice-cold morning in China and landing in balmy Melbourne in February, the men were driven to a share house in North Balwyn, with a translator shouting out instructions.
They would be picked up each morning and driven to a luxury multimillion-dollar apartment development site in Richmond, Melbourne. Food and accommodation would be provided and they would work a six-day week.
An investigation into what happened next shows the ease with which the rules designed to protect Australia's labour market and industrial system can be circumvented when free trade agreements open the nation's markets to the world because of a lack of oversight and enforcement.
'They're all paid in China. No one receives a cent over here.'
These men had agreed to fly to Australia for 10 weeks for $US75 a day – half now and the rest when they returned to China. In effect they agreed to work for less than $US10 an hour, a sum that is illegal in Australia, but more than double the average hourly wage paid in China.
The men arrived on subclass 400 visas. They were part of a deal struck between a Sydney company to purchase a car park stacker from China that came "with labour".
A new deal
The equipment purchase was made shortly after the federal government signed the China Australia Free Trade Agreement (ChAFTA), which promised to speed up the process for working visas, boost trade and slash tariffs.
The seven Chinese workers didn't know it but they were ChAFTA pioneers. They were holding some of the first subclass 400 visas issued as part of the new agreement. (The 400 visa is intended for temporary workers who are doing short-term, highly specialised, non-ongoing work for three to six months.)
The revelations come against a backdrop of growing fears that some of the country's 1.3 million foreign workers on visas – equivalent to one in 10 of the Australian workforce – are being exploited and undermining the economic fabric of the country,
A recent Senate inquiry into foreign worker exploitation heard many harrowing testimonies covering a raft of industries including food processing and late last year convenience chain 7-Eleven was also exposed for systemic underpayment of wages mostly to foreign students on visas.
Last year Taskforce Cadena, a joint taskforce including the Fair Work Ombudsman and Border Force, raided karaoke bars in Perth and Melbourne following allegations of wage fraud, sham contracting and sexual slavery of female hosts at the karaoke bars.
Stacking the deck
Now an investigation can reveal that Sydney-based Hercules Carparking Systems 2004 purchased the car park stacker from China-based Shenzhen Fine Automatic Machine Company in September. The Chinese company supplied the labour and paid the wages. The Australian company paid the airfares, accommodation and food.
Copies of the visas, passports and letters of invitation from Hercules inviting the men to come to Melbourne show they were brought out to "assist with the installation of our Pit Type lift and slide mechanical carparking machine".
The invitation letter said "nobody else in Australia could do the work" and so "your coming here will not affect the employment of any local citizens".
A similar letter, written by the Chinese company, said: "These visas were granted due to the high level of skills of the technicians, and there was no requirement to include details of wages paid on the visa applications."
Australian workers on the site beg to differ. One, who was contacted, disagreed that the work could only have been done by these men.
"It is ridiculous. A lot of the work is welding," he said.
There were also safety issues.
A worker said: "They were working on scaffolds and the safety equipment they brought with them wasn't safe."
Yet they should have known better. Under Occupational Health and Safety Regulations, it is compulsory for employers to ensure that training is provided to workers on construction sites to teach them about safety and hazards common in the building industry.
Documents show that on February 26, 2016, two days before boarding their plane, the non-English-speaking workers were granted "work safely in construction industry" certificates from NSW-based ABE Education, commonly referred to as a "white card".
It can be revealed that the course was taken online at a cost of $58. It was a multiple choice test, written in English, not Mandarin.
Stand-ins for testing
One caller inquiring about how to get "white cards" for 10 non-English-speaking Chinese workers asked ABE if it was OK for an Australian to complete the test on behalf of Mandarin-speaking employees.
ABE chief executive Dominic Ogburn said: "Yeah", before adding: "We've got another company, a Chinese construction company who have done the first one for them (the workers) and then they hand out the answers to them and then they go online and then do it themselves."
Ogburn later denied he was advising companies how to rort the system. He told Fairfax Media: "It's not the correct interpretation. It's not what I was trying to convey."
He said he had a strong compliance record.
The translator for the seven Chinese workers, Ming, told Fairfax Media the men were paid between $US70 and $US75 a day, which is well below the going rate for a lift industry worker of $42 an hour. It is also below the national minimum wage is currently $17.29 for a full-time adult worker.
The middle-aged workers were not given pay slips, paid penalty rates or paid super, despite working six days a week. As well as allegedly in breach of safety conditions they were not covered by WorkCover.
They were paid and technically employed by the Chinese company, which refused to respond to a series of questions.
Despite being paid illegal wages and flouting a number of laws, the arrival of the seven men into Australia was quick and simple.
A visa grant notice shows that the subclass 400 visas were issued to the seven Chinese workers the same day the application was lodged.
The fast-tracking of the visas is part of ChAFTA, which was signed last September amid fears it would be exploited by companies looking for cheap imported labour to reduce labour costs.
According to employment migration expert Joanna Howe, a senior law lecturer at Adelaide University and Rhodes scholar, the ChAFTA workers are required to be employed in accordance with Australian law.
But she says there are less checks and balances.
"The ChAFTA prevents labour market testing which means there is no proper mechanism to determine that a Chinese worker is not replacing local workers in the Australian labour market," she says.
It means Chinese companies can import a workforce on the subclass 400 visa for short-term projects without any labour market testing requirements.
"Although the 457 visa has additional regulatory requirements like a minimum wage threshold for visa holders, the subclass 400 visa does not have the same level of regulation and timeframes and procedures for visa approval are significantly more streamlined, meaning there are far less checks and balances."
'Low risk' means low oversight
All a visa holder has to do is provide a letter of offer from their overseas employer attesting to the fact that the worker's employment conditions satisfy Australian workplace standards and that their activities will not adversely impact Australian workers.
It means an employer can make a false assertion in a letter of offer and it would theoretically go undetected.
This is because subclass 400 visa applications are considered "low risk" by the Department of Immigration, according to Dr Howe.
"They have a standard processing time of five days. In fact most are approved within 24-48 hours," she said.
Additionally, there is no mandatory skills assessment for an installer or servicer from China on the subclass 400 visa once they arrive in Australia. This creates occupational, health and safety concerns.
Suppliers 'responsible' for wages
Hercules managing director Terry Smith places the onus of paying correct wages on the supplier of the stacker: "That's all over to the Chinese company," he told Fairfax Media.
Smith, who lives in a $3 million house in the blue-ribbon Sydney suburb of Mosman, says it is "absolutely incorrect" that the seven workers were only paid $US75 a day.
He says the $US75 per day figure was the result of a "translation on a translation", though Smith could not say how much the men actually got paid.
"They're all paid in China. No one receives a cent over here."
Visa for specialised skills
A spokesman for the Department of Immigration and Border Protection said the subclass 400 visa, also known as the Temporary Work (Short Stay Activity) visa, allows people to enter Australia to undertake short-term, highly specialised work.
"Applicants are required to demonstrate that they have specialised skills, knowledge or experience which can assist an Australian business and which cannot reasonably be found in the Australian labour market," the spokesman said.
"A requirement for the visa is that there be no adverse impact on the employment, training, or conditions of employment of Australian citizens or permanent residents," the spokesman said.
The signing of ChAFTA last June was steeped in politics as unions, some academics and the ALP went head to head with the federal government, warning that the looser regulations and decision not to include labour testing could potentially undermine award wages and jobs.
Turnbull lashed Labor
Indeed, in a television interview on September 23, Prime Minister Malcolm Turnbull said an advertising campaign supported by the union movement and the ALP was "extreme scare-mongering" "designed to frighten people back into poverty".
And earlier that month, then trade minister Andrew Robb slapped down Labor's attempts to introduce market testing into ChAFTA to ensure Chinese workers weren't taking Australian jobs, telling Parliament: "We are going to do things to China that we haven't done to any other country. That's the problem. All of a sudden, it underscores the xenophobic racist activities on your side of the House."
For the seven workers, things didn't go according to plan. According to the translator, their accommodation was shifted to serviced apartments closer to the site, where they shared a room.
After a few weeks, some of them were sent back to China.
Hercules' Smith, said there was "a change of plan".
Failure to comply with OHS
Smith, who was unable to explain why his previous business Hercules Carparking Systems went under in 2010 owing creditors hundreds of thousands of dollars, confirmed that they didn't stay the full 10 weeks.
"They were experts who marked out the specifications of the machine," he said. "In fact the factory insisted that, with that being the first, that they did send a crew out to get the marking done correctly."
The men ceased work after allegedly being caught not complying with occupational health and safety laws.
A worker on the site said the safety equipment was "like kids' toys".
Another said they used a thin piece of nylon as a harness when they were on the scaffold.
"It was something you would use on a dog," he said. "It was so unsafe, it was appalling.
Smith said the men flew back to China and he employed a local crew to complete the job.
Smith's business is booming in the wake of the apartment development craze across Australia. He said he had 170 projects on the go and was receiving inquiries daily.
"We've got about another 20 of those (car stackers) coming but now that it's been fully explained how they get marked out – because there's a process to it all – the future ones we don't need anyone coming out," Smith said.
"In fact it's a pain in the neck to get these guys to come out because of the visas and visas can take time and there were delays in the visas. We'd much rather have our own crews."
When asked whether it was possible that the problem with the rates of pay was at the China end of the arrangement, Smith said: "We've worked with this company before. I don't see why they would want to tell us porky pies."
Smith said he could provide a certificate from the factory in Shenzhen showing how much the workers from China were being paid for their work in Australia.
However, Smith did not return calls after the first interview earlier this week and no certificate was produced. The Chinese company, which was the employer of the seven men, did not respond to a series of questions about its previous and current dealings with Hercules or how much the workers were paid.
Allegations taken seriously
A spokesman for the Department of Immigration and Border Protection said the government "took seriously" all allegations of overseas workers being exploited and underpaid.
"All temporary visa holders with work rights are entitled to the same basic rights and protections as Australian under applicable workplace laws," the spokesman said.
"Employers are obliged to engage and remunerate staff in accordance with the Fair Work Act," the spokesman said.
ChAFTA is now in full swing, with some companies benefiting from the reduced tariffs and easier access to the world's largest marketplace, but for Howe, it has flaws that need fixing.
When it comes to the subclass 400 visa she says it isn't too late to redesign "so that there are stricter processes around approval and enforcement of visa holders' workplace rights, wages and conditions".
It should only be limited to highly skilled occupations instead of semi and lower skilled occupations, and only available to occupations that are in short supply in Australia.
"Given Australia's increasing reliance on overseas workers, facilitated by free trade agreements like the ChAFTA, Australia has an ethical responsibility to ensure that the regulatory design of visas and the resources of the enforcement agencies (DIBP and FWO) are sufficient to meet the scale of the non-compliance challenge," Howe said.