Entitled, "Growing Regional Victoria," the Victorian Chamber of Commerce and Industry is pushing yet more growth in infrastructure and housing on regional Victoria, with the accompanying short-term jobs and destruction of environment, space, and biodiversity. Anyone travelling through regional Victoria (and almost any Australian state) will notice the drab housing estates with their ever meaner lots and devegetated surrounds, wedging miscellaneous drifts of precarious humans desperate for accommodation
"People end up with nothing because they really don't believe we have a system as bad as we do." Consumers are unprotected in Australia's building disaster. "You may have a house that's being demolished, but you still have a block of land. If you've got any superannuation or anything in the bank, at least hang on to that." Anne Paten of Victorian Building Action Group (VBAG) talks about how the system that's supposed to help building consumers actually bleeds the victims of the industry even more. People qualify for insurance, but never get the money. They go to VCAT and are sent away with nothing. The results are bankruptcy, divorces, and suicides. Substantial reports and inquiries are removed from the internet. Australians need to realise that the government won't help them; they have to join together and help each other.
We have transcribed some highlights from the videoed speech full of extraordinary revelations - made at the Victorian Building Activists Group AGM 2019.
Since 2002 there have been mandated payments for builders in all states to take out domestic building insurance (DBI in Victoria), yet almost no owner who has suffered by bad building has successfully claimed their insurance, despite multiple defects. For instance, in 2011, $88m was paid into the Victorian fund, a year when 40% of building consumers suffered financial loss.  Yet, for that same year, only three owners had successful insurance claims against their builders. Yet many, many more qualify. The money goes to salaries in administrative infrastructure for the funds. Recently it was reported that owners who suffered in the 2011 Lacrosse dangerous cladding fire disaster had a 'big' win of $7.5m at VCAT. This sum does not even cover the amount paid to get people out of the building on the day of the fire. Owners have borrowed far more than that just to go to court. And the builder was not even held responsible. They system protected him.
At 10 minutes into the video:
"In 2012, the Victorian Omsbudsman found  that the [Victorian] Building Commission, instead of being a 'regulator'[...] was taking the big building companies out to dinner, to the best restaurants, with the best bottles of wine then getting them tickets for the tennis centre, for the football, and so on, and giving the money to the HIA, the MBA. [...] the money that runs all of those organisations is from building permits [...] so, in other words, all of us [victims of this system]. [...]"
"[The Victorian Building Commission, VBA] uncovered the registration system. Effectively the registration system is, if you cannot speak English, cannot read plans, cannot write a sentence, know nothing about building, and have never seen a hammer, you would make an excellent builder. So get registered. The book, the Game of Mates, calls it the 'favour system'. It's not like you go to the doctor, the teacher, the school: These people have no qualifications. And, of course, they don't build! So, we have builders who don't build, we have surveyors who don't survey, and we have regulators who don't regulate. So, in a sense, that's it. That's all we have to really understand.
So, by 2015, they had changed the name of the [Victorian] Building Commission. They had removed everything from its 20 year history from the web."
[You cannot even find the Auditor General's 2012 report. The link from TROVE to the pdf at Auditor General's site leads to a page-error.]
In 2015, they're [...] doing the third Auditor General's report, and they've changed auditor generals and they've changed the Ombusdsman, because anyone who is putting all the facts and pointing out has to be moved on.
 Consumer Confidence and Market Experience Study Victorian Consumers CAV 2011.
"This report identifies problems in the governance and administration of the Victorian Building Commission and the manner in which it expends monies generated from its regulation.
"In March 2012 the Ombudsman's Office received information from several sources in relation to concerns about the Victorian Building Commission (the Commission). These concerns included that the Commission:
- paid contractors significant amounts for investigative services
- contracted external investigators who were former Commission staff
- made significant payments to external investigators based upon invoices which lacked detail about the amounts charged
- employed former police officers as investigators with little or no building experience
- poorly managed an information technology project which was several million dollars over budget
- operated at a significant deficit.
-This resulted in Ombudsman conducted an own motion investigation into the governance and administration of the Commission.
During the investigation additional issues were identified. These included significant expenditure by Commission staff on hospitality and entertainment and concerns about the administration and integrity of the registration system for building practitioners."
The former owner of two Subway franchises in Sydney has been penalised $65,000 after underpaying a former employee by $16,345.
The employee working at outlets at Artarmon and Stanmore was paid just $14-$14.50 an hour, between October 2014 and April 2016.
That’s well below the minimum rate of $18.
The Chinese national worker was also entitled to a casual loading payment and penalty rates of up to $52.22 on public holidays.
The Fair Work Ombudsman also found the worker hadn’t been granted a special clothing allowance, and the employers had failed to meet record-keeping and pay slip requirements.
Danmin Zhang, who formerly operated the outlets was penalised $9,255 by the Fair Work Ombudsman, with the company she owns with her husband, G & Z United, penalised an additional $56,183.
The Fair Work Ombudsman investigation came after the worker – who was pack-paid in 2017 – lodged a request for assistance.
The Fair Work Ombudsman also emphasised that Zhang is no longer involved with the two Subway restaurants.
“It is unlawful for employers to pay their employees low, flat rates that undercut minimum Award wage rates. This franchisee paid their worker a flat rate that was $4 below the lawful rate, and now faces paying a $65,000 penalty from the Court,” Fair Work Ombudsman Sandra Parker said today.
“The penalty should send a message to fast food businesses that compliance in the workplace is not an option – it’s the law. Every worker in Australia has the same workplace rights and we encourage anyone with concerns to contact the Fair Work Ombudsman.”
It comes just days after fashion startup, Her Fashion Box was fined $329,113 after underpaying staff by illegally classifying them as interns.
The casual worker, who was in Australia on a skilled visa, was paid unlawful flat rates of $14 to $14.50 an hour for 18 months.
There it is in all of its glory:
migrants ripping off migrants;
absurdly low level “skilled visa” for a sandwich maker;
higher youth unemployment and wider underemployment,
leading to broad wage compression.
This is the core of weak Australian wages. The nation has never run mass immigration into material economic slack before but that’s what we did after the GFC:
What does economics 101 tell us happens when a perpetual supply shock lands on weak demand? Prices fall. Mass immigration has destroyed Australian labour’s pricing power even as it rewrote industrial relations with floods of cheap foreign workers.
Academic research finally caught up to this reality late last year. Below are key excepts from Chapter 13 entitled Temporary migrant workers (TMWs), underpayment and predatory business models, written by Iain Campbell:
This chapter argues that the expansion of temporary labour migration is a significant development in Australia and that it has implications for wage stagnation…
Three main facts about their presence in Australia are relevant to the discussion of wage stagnation. First, there are large numbers of TMWs in Australia, currently around 1.2 million persons. Second, those numbers have increased strongly over the past 15 years. Third, when employed, many TMWs are subject to exploitation, including wage payments that fall below — sometimes well below — the minimum levels specified in employment regulation…
One link to slow wages growth, as highlighted by orthodox economics, stems from the simple fact of increased numbers, which add to labour supply and thereby help to moderate wages growth. This chapter argues, however, that the more salient point concerns the way many TMWs are mistreated within the workplace in industry sectors such as food services, horticulture, construction, personal services and cleaning. TMW underpayments, which appear both widespread in these sectors and systemic, offer insights into labour market dynamics that are also relevant to the general problem of slow wages growth…
Official stock data indicate that the visa programmes for international students, temporary skilled workers and working holiday makers have tripled in numbers since the late 1990s… In all, the total number of TMWs in Australia is around 1.2 million persons. If we include New Zealand citizens and permanent residents, who can enter Australia under a special subclass 444 visa, without time limits on their stay and with unrestricted work rights (though without access to most social security payments), then the total is close to 2 million persons… TMWs now make up around 6% of the total Australian workforce…
Decisions by the federal Coalition government under John Howard to introduce easier pathways to permanent residency for temporary visa holders, especially international students and temporary skilled workers, gave a major impetus to TMW visa programmes.
Most international students and temporary skilled workers, together with many working holiday makers, see themselves as involved in a project of ‘staggered’ or ‘multi-step’ migration, whereby they hope to leap from their present status into a more long-term visa status, ideally permanent residency. One result, as temporary migration expands while the permanent stream remains effectively capped, is a lengthening queue of onshore applicants for permanent residency…
Though standard accounts describe Australian immigration as oriented to skilled labour, this characterisation stands at odds with the abundant evidence on expanding temporary migration and the character of TMW jobs. It is true that many TMWs, like their counterparts in the permanent stream, are highly qualified and in this sense skilled. However, the fact that their work is primarily in lower-skilled jobs suggests that it is more accurate, as several scholars point out, to speak of a shift in Australia towards a de facto low-skilled migration programme…
A focus on raw numbers of TMWs may miss the main link to slow wages growth. It is the third point concerning underpayments and predatory business models that seems richest in implications. This point suggests, first and most obviously, added drag on wages growth in sectors where such underpayments and predatory business models have become embedded. If they become more widely practised, underpayments pull down average hourly wages. If a substantial number of firms in a specific labour market intensify strategies of labour cost minimisation by pushing wage rates below the legal floor, it can unleash a dynamic of competition around wage rates that foreshadows wage decline rather than wage growth for employees…
Increases in labour supply allow employers in sectors already oriented to flexible and low-wage employment, such as horticulture and food services, to sustain and extend strategies of labour cost minimisation… The arguments and evidence cited above suggest a spread of predatory business models within low-wage industries.37 They suggest an unfolding process of degradation in these labour markets…
And below are extracts from Chapter 14, entitled Is there a wages crisis facing skilled temporary migrants?, by Joanna Howe:
Scarcely a day goes by without another headline of wage theft involving temporary migrant workers…
In this chapter we explore a largely untold story in relation to temporary migrant workers… it exposes a very real wages crisis facing workers on the Temporary Skill Shortage (TSS) visa (formerly the 457 visa) in Australia. This crisis has been precipitated by the federal government’s decision to freeze the salary floor for temporary skilled migrant workers since 2013… the government has chosen to put downward pressure on real wages for temporary skilled migrants, thereby surreptitiously allowing the TSS visa to be used in lower-paid jobs…
In Australia, these workers are employed via the TSS visa and they must be paid no less than a salary floor. This salary floor is called the Temporary Skilled Migration Income Threshold (TSMIT). TSMIT was introduced in 2009 in response to widespread concerns during the Howard Government years of migrant worker exploitation. This protection was considered important because an independent review found that many 457 visa workers were not receiving wages equivalent to those received by Australian workers…
In effect, TSMIT is intended to act as a proxy for the skill level of a particular occupation. It prevents unscrupulous employers misclassifying an occupation at a higher skill level in order to employ a TSS visa holder at a lower level…
TSMIT’s protective ability is only as strong as the level at which it is set. In its original iteration back in 2009, it was set at A$45 220. This level was determined by reference to average weekly earnings for Australians, with the intention that TSMIT would be pegged to this because the Australian government considered it ‘important that TSMIT keep pace with wage growth across the Australian labour market’. This indexation occurred like clockwork for five years. But since 1 July 2013, TSMIT has been frozen at a level of A$53 900. ..
There is now a gap of more than A$26 000 between the salary floor for temporary skilled migrant workers and annual average salaries for Australian workers. This means that the TSS visa can increasingly be used to employ temporary migrant workers in occupations that attract a far lower salary than that earned by the average Australian worker. This begs the question — is the erosion of TSMIT allowing the TSS visa to morph into a general labour supply visa rather than a visa restricted to filling labour market gaps in skilled, high-wage occupations?..
But why would employers go to all the effort of hiring a temporary migrant worker on a TSS visa over an Australian worker?
Renowned Australian demographer Graeme Hugo observed that employers ‘will always have a “demand” for foreign workers if it results in a lowering of their costs’. The simplistic notion that employers will only go to the trouble and expense of making a TSS visa application when they want to meet a skill shortage skims over a range of motives an employer may have for using the TSS visa. These could be a reluctance to invest in training for existing or prospective staff, or a desire to move towards a deunionised workforce. Additionally, for some employers, there could be a belief that, despite the requirement that TSS visa workers be employed on equivalent terms to locals, it is easier to avoid paying market salary rates and conditions for temporary migrant workers who have been recognised as being in a vulnerable labour market position. A recent example of this is the massive underpayments of chefs and cooks employed by Australia’s largest high-end restaurant business, Rockpool Dining Group, which found that visa holders were being paid at levels just above TSMIT but well below the award when taking into account the amount of overtime being done…
Put simply, temporary demand for migrant workers often creates a permanent need for them in the labour market. Research shows that in industries where employers have turned to temporary migrants en masse, it erodes wages and conditions in these industries over time, making them less attractive to locals…
A national survey of temporary migrant workers found that 24% of 457 visa holders who responded to the survey were paid less than A$18 an hour. Not only are these workers not being paid in according with TSMIT, but they are also receiving less than the minimum wage. A number of cases also expose creative attempts by employers to subvert TSMIT. Given the challenges many temporary migrants face in accessing legal remedies, these cases are likely only scratching the surface in terms of employer non-compliance with TSMIT…
Combined, then, with the problems with enforcement and compliance, it is not hard to conclude that the failure to index TSMIT is contributing to a wages crisis for skilled temporary migrant workers… So the failure to index the salary floor for skilled migrant workers is likely to affect wages growth for these workers, as well as to have broader implications for all workers in the Australian labour market.
The micro-economic evidence has been overwhelming for years:
For years we have seen Dominos, Caltex, 7-Eleven, Woolworths and many other fast food franchises busted for rorting migrant labour.
Mid last year, ABC’s 7.30 Report ran a disturbing expose on the modern day slavery occurring across Australia.
Meanwhile, Fair Work Ombudsman (FWO), Natalie James, told Fairfax in August last year that people on visas continue to be exploited at an alarming rate, particularly those with limited English-language skills. It was also revealed that foreign workers are involved in more than three-quarters of legal cases initiated by the FWO against unscrupulous employers.
Then The ABC reported that Australia’s horticulture industry is at the centre of yet another migrant slave scandal, according to an Australian Parliamentary Inquiry into the issue.
A recent UNSW Sydney and UTS survey painted the most damning picture of all, reporting that wages theft is endemic among international students, backpackers and other temporary migrants.
A few months ago, Fair Work warned that most of Western Sydney had become a virtual special economic zone in which two-thirds of businesses were underpaying workers, with the worst offenders being high-migrant areas.
Dr Bob Birrell from the Australian Population Research Institutelatest report, based on 2016 Census data, revealed that most recently arrived skilled migrants (i.e. arrived between 2011 and 2016) cannot find professional jobs, with only 24% of skilled migrants from Non-English-Speaking-Countries (who comprise 84% of the total skilled migrant intake) employed as professionals as of 2016, compared with 50% of skilled migrants from Main English-Speaking-Countries and 58% of the same aged Australian-born graduates. These results accord with a recent survey from the Bankwest Curtin Economics Centre, which found that 53% of skilled migrants in Western Australia said they are working in lower skilled jobs than before they arrived, with underemployment also rife.
The Australian Bureau of Statistics (ABS) latest Characteristics of Recent Migrants report, revealed that migrants have generally worse labour market outcomes than the Australian born population, with recent migrants and temporary residents having an unemployment rate of 7.4% versus 5.4% for the Australian born population, and lower labour force participation (69.8%) than the Australian born population (70.2%).
ABC Radio recently highlighted the absurdity of Australia’s ‘skilled’ migration program in which skilled migrants have grown increasingly frustrated at not being able to gain work in Australia despite leaving their homelands to fill so-called ‘skills shortages’. As a result, they are now demanding that taxpayers provide government-sponsored internships to help skilled migrants gain local experience, and a chance to work in their chosen field.
In early 2018 the senate launched the”The operation and effectiveness of the Franchising Code of Conduct” owing in part to systematic abuse of migrant labour.
Then there is new research from the University of Sydney documenting the complete corruption of the temporary visas system, and arguing that Australia running a “de-facto low-skilled immigration policy” (also discussed here at the ABC).
Wright and Constantin (2015) surveyed employers using the 457 visa scheme and found that 86% state that they have experienced challenges recruiting workers locally. Despite identified recruiting difficulties, the survey found that fewer than 1 in one hundred employers surveyed had addressed ‘skill shortages’ by raising the salary being offered. Labour ‘shortages’ should first be addressed through a readjustment in the price of labour – increased wages. An inability to find local workers to work at a specified wage rate, coupled with an unwillingness to offer higher wages, does not necessarily imply a skill shortage – particularly where local workers would be willing and able to work if the wage rate was lifted. This differs from a skill shortage in which there are simply not enough people with a particular skill to meet demand.
The relatively recent availability of a large and vulnerable pool of temporary migrant workers has undoubtedly contributed to current record low levels of wages growth and a growing reluctance by employers to train local workers…
While there are approximately 1.5 million temporary entrants with work rights, the overseas worker team at the Fair Work Ombudsman consists of only 17 full time inspectors to investigate cases of exploitation – over 80,000 visa workers per inspector. Inadequate enforcement and penalties act as an incentive for employers to exploit temporary workers when the benefit from doing so outweighs the cost of the penalty. or where the probability of being caught is sufficiently low….
There have been a range of abuses uncovered which have clearly shown that the entire system is broken. From 7-11 and Domino’s to agriculture, construction, food processing to Coles, Dominos and Caltex, it is clear that the abuses occur in a number of visa classes whether they be students, working holiday makers or visa workers in skilled occupations.
These abuses include: a) Underpayment of wages and superannuation, including being forced to pay back wages b) Abuse ranging from psychological to physical c) Threats of deportation if complaints are made or workers join unions d) Being forced to live in sub-standard conditions
A system predicated overwhelmingly on temporary work cannot create the benefits that migration has been praised for…
Migration intermediaries have a vested interest in inflating demand. Australia has created a massive industry with many migration agents outside of our jurisdiction who cannot be prosecuted for breaches. This mushrooming “migration industry”- a complex and transnational web of agents, lawyers, labour recruiters, accommodation brokers and loan sharks – is currently largely unregulated.
The growth of labour hire operators alongside the migration industry has led to companies seeking to sell temporary migrant workers to employers, creating a fake “Job Network” which preferences temporary workers over Australians.
Labor must comprehensively reform the visa system and cut temporary as well as permanent migration numbers or it will never lift wages.
We reckon the easiest way to end the rorts is simply raise the minimum salary for skilled visas to $100k.
"What this debate is really about is not who gets what jobs but which elements of capital win along the way. McDonald and Richardson are obsessed with supporting the immigration-led urbanisation sectors to the detriment of tradables and wider community living standards as infrastructure fails to keep up, wages are crushed by the rush of cheap foreign labour and house prices shoot to stupid levels. McDonald is a demographer not economist so has no idea. Richardson has simply lost the macro plot. Before these dills came along with their immigration voodoo Australia and its labour market fared just fine and it will afterwards as well. In fact it will be better in time as the permanent supply shock of cheap foreigners killing wages and productivity ends, boosting income."
Economic experts have warned the Government faces a challenge in meeting its new jobs target if it restricts migration, and even if it does deliver on its pledge, Australians may not be the ones to benefit.
It follows a similar pledge by Tony Abbott prior to the 2013 election to create 1 million jobs by 2018.
Peter McDonald, Emeritus Professor of Demography at ANU’s Crawford School of Public Policy, said it was an “achievable” target and that a recent projection of labour market demand by Victoria University had already earmarked a similar level of demand.
But he also noted migration was the largest contributor to the growth in employment numbers in Australia since 2013, ahead of the growing trend for older Australians to stay in work.
The permanent migration program was reduced from around 190,000 to just above 160,000 in the past two years.
Mr Morrison revealed last year it’s likely the intake would remain at this new, lower level.
Deloitte Access Economics partner Chris Richardson said his firm forecasted that, at this stage, jobs growth would fall short of the Government’s 2023 target.
“You get, basically, growth in jobs pretty much anyway — over time, there are more Australians, that typically means more jobs, but it does get more complicated than that,” Mr Richardson said.
“An ageing population means more people are retiring, that makes it harder.
“The migration debate — if it means winding back the number of migrants — that also makes it harder.”
The Department of Jobs’ Employment Outlook, released last year, projects employment to increase by 886,100 over the five years to May 2023.
Mr Richardson said the ratio of new skilled adult migrants to jobs growth was “pretty much one to one”, despite community concerns over migration fuelled by “barbecue logic”.
“People think, ‘well if migrants arrive, surely they’re taking jobs and if other things are equal, that means less jobs for everyone else’,” he said.
“If somebody puts up a hand to take a job — a migrant, a married woman, a Martian — they get the job, they earn the income, spend the income, then create the next job.”
Professor McDonald said if the Government restricted permanent migration, the employees needed by Australian businesses would not come from the ranks of the local unemployed.
“If labour demand is strong, and permanent migration is not filling the demand, then it will come from temporary migration or New Zealanders,” he said.
A reduction in immigration, he argues, would not necessarily lead to more jobs for Australians.
What total drivel. Australia has a large surplus of labour which is why wages are stuck in the gutter:
If migration is cut then we’ll see a shift in the patterns of demand in the economy not the end of the world. There will be less urbanisation and therefore less jobs in that area. That will result in lower interest rates and a much lower currency triggering greater offshore demand and boosting the 40% of the economy that is tradable. Ironically this will prevent any serious shakeout from hitting urbanisation sectors while rising prospects for exporters and import competers will create more jobs in those areas of the economy and they will all go to locals. When the labour market tightens enough and shortages appear then wages will rise. Fancy that!
If these wage rises get excessive then interest rates will rise and job creation slow or firms invest more heavily in automation for greater productivity and the gains be shared with fewer needed workers. these are also the dynamics that will easily resolve any aging population issues.
This is simply called an “adjustment”. The economy is not set in concrete (unless you’re paid by property developers to say so), it is a living system designed to compensate for such shifts.
What this debate is really about is not who gets what jobs but which elements of capital win along the way. McDonald and Richardson are obsessed with supporting the immigration-led urbanisation sectors to the detriment of tradables and wider community living standards as infrastructure fails to keep up, wages are crushed by the rush of cheap foreign labour and house prices shoot to stupid levels. McDonald is a demographer not economist so has no idea. Richardson has simply lost the macro plot.
Before these dills came along with their immigration voodoo Australia and its labour market fared just fine and it will afterwards as well. In fact it will be better in time as the permanent supply shock of cheap foreigners killing wages and productivity ends, boosting income.