Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2013 - 2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
MIGRATION AMENDMENT (OFFSHORE RESOURCES ACTIVITY) REPEAL BILL 2014
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Immigration and Border Protection,
the Hon. Scott Morrison MP)
Migration Amendment (Offshore Resources Activity) Repeal Bill 2014
OUTLINE
The Migration Amendment (Offshore Resources Activity) Repeal Bill 2014 repeals the
Migration Amendment (Offshore Resources Activity) Act 2013 ("Offshore Resources Activity
Act").
The Offshore Resources Activity Act received the Royal Assent on 29 June 2013. The
operative provisions in this Act have not yet commenced.
Most relevantly, the Offshore Resources Activity Act will amend the Migration Act 1958 to
provide that a person is taken to be in the migration zone while he or she is in the area to
participate in, or to support, an offshore resources activity in relation to that area. This means
that a person who is deemed to be in the migration zone in this way will be required to hold
either a permanent visa or a visa prescribed by the regulations for the purpose of allowing the
holder of that visa to participate in, or support, an offshore resources activity.
The Government intends to repeal the Offshore Resources Activity Act as it will increase the
regulatory burden on the resources industry and will have significant impacts for businesses
and investors.
FINANCIAL IMPACT STATEMENT
The financial impact of these amendments is low. The estimated costs associated with the
implementation of the proposed amendments will be met from within the Department's
existing funding.
REGULATION IMPACT STATEMENT
The Office of Best Practice Regulation has assessed the Regulation Impact Statement (RIS)
prepared by the Department as compliant with Government RIS requirements (No. 16740). A
copy of the RIS is at Attachment A.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
A Statement of Compatibility with Human Rights has been completed in relation to the
amendments in this Bill and assesses that the amendments are compatible with Australia's
human rights obligations. A copy of the Statement of Compatibility with Human Rights is at
Attachment B.
2
MIGRATION AMENDMENT (OFFSHORE RESOURCES ACTIVITY) REPEAL
BILL 2014
NOTES ON INDIVIDUAL CLAUSES
Clause 1 Short title
1. Clause 1 inserts the short title by which the Act may be cited.
2. Clause 1 of the Bill provides that this Act may be cited as the Migration Amendment
(Offshore Resources Activity) Repeal Act 2014.
Clause 2 Commencement
3. Clause 2 provides that this Act commences on the day this Act receives the Royal
Assent.
Clause 3 Schedule(s)
4. Clause 3 provides that each Act that is specified in a Schedule to this Act is amended
or repealed as set out in the applicable items in the Schedule concerned, and any other
item in a Schedule to this Act has effect according to its terms.
5. The purpose of this clause is to clarify that Schedule 1 to the Bill will repeal the
Migration Amendment (Offshore Resources Activity) Act 2013.
3
Schedule 1-Repeal
Migration Amendment (Offshore Resources Activity) Act 2013
Item 1 The whole of the Act
6. This item repeals the whole of the Migration Amendment (Offshore Resources Activity)
Act 2013.
7. The purpose of repealing this Act is to give effect to the Government's position that the
provisions in this Act increase the regulatory burden on the resources industry and will
have significant impacts for businesses and investors.
4
Attachment A
Migration Amendment (Offshore Resources
Activity) Repeal Bill 2014
Regulation Impact Statement
(OBPR ID: 2014/16740)
Department of Immigration and Border Protection
March 2014
1
1. The Policy Problem
1.1 Background to the problem
The way the migration zone applies to offshore resources activity has for many years been highly
contentious. The migration zone defines the area of Australia where a non-citizen must hold a valid
visa to legally enter and remain in Australia. Under the Migration Act 1958 (the Migration Act), a
non-citizen who is in the migration zone, but does not hold a valid visa, is deemed to be an unlawful
non-citizen and is subject to immigration detention.
Section 5 of the Migration Act provides that the migration zone consists of:
the States and Territories (at the low water mark);
sea within the limits of both a State or a Territory and a port;
piers, or similar structures, any part of which is connected to such land or to ground under
such sea; and
Australian resource installations and Australian sea installations.
In May 2012, in the case of Allseas Construction S.A. v Minister for Immigration and Citizenship
[2012] FCA 529 (Allseas), the Federal Court of Australia ruled that two vessels, and non-citizens
working on board these vessels, were not within the migration zone, and therefore not required to
hold visas for the work they were doing. This was due to the fact that both vessels fell within an
exemption to the definition of a resource installation contained in the Migration Act, and were
therefore not part of the migration zone.
This decision provoked a strong criticism from maritime unions, who argued that by not being
required to hold work visas (such as the 457 visa), the vessel operators were able to circumvent the
requirement to pay overseas workers Australian rates, which is a requirement under the 457 visa,
which would have adverse labour market consequences for Australians.
1.2 The Legislative Response
In response to the decision in Allseas, the previous Parliament passed the Migration Amendment
(Offshore Resources Activity) Act 2013 (the ORA Act), which received Royal Assent on 29 June 2013.
A Regulation Impact Statement (RIS) for this legislation was undertaken in March 2013. The
operative provisions in the ORA Act will commence on 30 June 2014.
The ORA Act supplements the existing provisions in section 5 of the Migration Act determining the
migration zone by providing that a person will be taken to be in the migration zone while he or she is
in an area to participate in, or support, an offshore resources activity in relation to that area. It also
provides that a person who is in the migration zone to participate in, or support, an offshore
resources activity must hold either a permanent visa, or a visa prescribed by the regulations for this
purpose.
1.3 Intention of the Legislation
The intention of the ORA Act was to regulate the employment of overseas workers in the offshore
resources industry, and to impose Australian terms and conditions of employment (or rates of pay)
to all non-citizens working in the industry. It does this by expanding the scope of the migration zone,
2
and by extension the requirement to hold and comply with a valid visa, to all offshore resources
activity, and not just to persons working on a resource installation.
A key aspect of the decision to introduce the amendments was that a dedicated visa pathway would
be developed for the offshore resources industry. This would ensure that all persons who are in the
migration zone to participate in, or support, an offshore resources activity when the ORA Act
commences would be able to apply for and hold an appropriate visa. The visa would also provide
the capacity to include labour market or salary criteria, to undertake character and health checks on
visa applicants, and to provide greater clarity on the number of non-citizens actually working in
Australia's offshore maritime zones.
What this means in practice is that the industry, who recruit internationally, do not differentiate
between and Australian citizen worker and a foreign national. The workers on these vessels are not
recruited by project and are all remunerated in common packages as per international maritime
industrial law and standards. The workers would be a range of low to highly skilled occupations and
would reflect broad international nationalities, which may require visas depending on their status as
Australian/citizens, already holding a visa (eg 457) or non-visaed.
The visa therefore, is simply a red tape, bureaucratic process to confirm the status of a foreign
national in the migration zone.
1.4 Status of Regulatory Impact Statements at key decision points
The Mid-Year Economic and Fiscal Outlook 2013-14 (MYEFO) of December 2013 included a decision
to reverse funding for the Reform of the Migration Zone for Offshore Workers.
On 12 February 2014, the Assistant Minister for Immigration and Border Protection gave policy
approval to repeal the ORA Act. An options stage RIS was not prepared.
2. Why is Government Action Needed?
2.1 Unnecessary and disproportionate regulation
The ORA Act fails to adequately appreciate the complex and overlapping regulatory framework -
including international conventions and Commonwealth, State and Territory legislation - in which
the offshore resources industry operates, which will be unaffected if the ORA Act is repealed.
For example, terms and conditions of employment will continue to be protected and enforced under
domestic laws, and under international convention through the International Labour Organisation's
Maritime Labour Convention. As the workplace relations and migration systems are subject to
separate legislative frameworks, non-citizens' terms and conditions of employment are subject to
regulation regardless of whether they are prescribed in sponsorship obligations or visa criteria.
Non-citizens working on resource installations, or who come to the Australian mainland to work, are
already required to hold work visas. Non-citizens must also valid visas hold to be immigration
cleared when they transit through an Australian airport on their way to and from resource
installations and vessels - hence they are still subject to immigration controls, even if they are not
required to hold a visa for the activity they are undertaking on the resource installation or vessel.
3
While the precise number of non-citizens working in the industry who are not currently required to
hold visas is unknown, indications are that it is relatively small. One estimate has put the total at
approximately 2000 per year (by comparison 68 000 subclass 457 visas were granted in 2012-13),
while others have put the number at considerably fewer than this. The prevalence of fly-in fly-out
arrangements mean that overseas workers generally remain in Australia for relatively short periods
of time, meaning that only a proportion of the estimated 2000 will actually be in Australia at any
given time.
For these reasons, the ORA Act will impose unnecessary and disproportionate regulation on the
industry.
2.2 Impact on Industry
The development of Australia's offshore resources contributes significantly to the Australian
economy, and employs thousands of Australians. Australia is the world's ninth largest energy
producer, and the oil and gas industry account for 21/2 per cent of GDP, generating $28 billion in
revenue, and contributing $9 billion in direct tax payments. It is also critical for Australia's future
energy security, accounting for 58 per cent of Australia's primary energy needs.
The offshore resources industry has a strong international focus, and relies on a highly mobile
workforce that can be transferred from project to project, and from country to country. For
example, the Australian Petroleum Production and Exploration Association have said that many
employees working on pipe laying vessels have `specialised skills which are historically accessed
globally, wherever the pipe laying vessel is contracted to operate'.
The workforce is also highly specialised, with the demand for specialist skills likely to increase. For
example, the Australian Workforce and Productivity Agency noted in its 2013 report on resource
sector skill needs that as it moves from construction into an operations phase, that the oil and gas
industry in particular `will need to develop more people with specialised technical skills and industry
experience'.
Employment growth in `oil and gas operations' is projected to outpace growth in other parts of the
sector - with employment levels for maritime crews increasing from 475 000 to 766 000 between
2013 and 2018 - and the subsector is `likely to experience an acute undersupply of appropriately
skilled workers across all occupational groups' with professionals and trade occupations being the
worst affected.
Migration arrangements therefore need to be relatively flexible, and not create excessive barriers
for overseas labour, if skill shortages in the industry are not to be exacerbated.
Industry groups have consistently opposed the ORA Act, and have predicted serious economic
consequences if it is allowed to proceed. For example, the Australian Mines and Metals Association
warned that the ORA Act would impose `a further suffocating regulatory burden' on the industry and
would `place untenable cost pressures on the resource industry' which would be `both direct and
indirect, in terms of compliance and administration costs'. This would `put at risk the viability of
current projects and weigh heavily against the commencement of future projects'. These
statements along with others have been drawn from the evidence provided by these bodies to the
senate Inquiry into the ORA Act.
4
Regarding the context for the statement of `serious economic consequences' if the ORA Act
proceeds, it should be noted the evidence provided by relevant industry groups over an extended
period of time - including to the Senate's Legal and Constitutional Affairs Legislation Committee to
which the legislative amendments were referred - on the likely economic impact of the ORA Act.
This information was included in the original RIS, and as the legislation has not actually commenced,
it remains the only available evidence of the ORA Act's economic impact.
While the cost impact is difficult to estimate in the absence of a visa, costs associated with an
employer-sponsored visa such as the 457 visa can include visa application charges, sponsorship and
nomination fees, migration agent fees, financial contributions to training funds, costs linked to
sponsorship obligations (such as record keeping and return travel costs), English language tests and
medical examinations for visa applicants, paid health insurance for visa applicants, and costs
associated with complying with immigration clearance and reporting requirements for maritime
crews.
Specifically, the issue of immigration clearance is complex and potentially damaging to the industry.
If clearance were to be physically required, this could cause major delays to the timing of entry for
the ships and when work can commence. AMMA has cited that if the burden were to be too
onerous companies may not take up contract offers and therefore large billion dollar projects may
not be able to proceed as planned.
Shipping Australia Limited has said that the ORA Act would `have unintended consequences, be
unwieldy to implement, substantially increase costs (in administration, ship time costs and wage bills
for resource development projects) and be difficult to monitor to ensure compliance'. This would
result in `the suspension or cancellation of potential development projects' ... and `negative impact
on Australia's future export earnings and taxation revenue'.
3. The Policy Options
3.1 Implement a visa with an obligations framework for the sponsoring employer - the
`status-quo' option
This option would involve the development of regulations to create a temporary work visa
specifically for non-citizens employed in the offshore resources industry. This would have a number
of features common to the subclass 457 visa, such as a sponsorship framework, nomination of the
position to be filled, labour market and/or salary criteria, and sponsorship obligations.
3.2 Implement a `light-touch' regulatory option
This option would involve the development of Regulations that prescribe a visa option for non -
citizens employed in the offshore resources industry. The preference would be to implement a visa
option which has the least possible regulatory impact on the industry but which gives effect to the
requirements in the ORA Act. This may be possible through the use (with some minor modification)
of existing visa products.
3.3. Repeal the ORA Act
Repeal of the legislation prior to its commencement would involve least cost to the offshore
resources industry as it would maintain existing arrangements for the industry.
5
4. Likely Benefits of Each Option
4.1 A visa with an obligations framework for the sponsoring employer
A visa with a sponsorship framework would allow greater scrutiny of employers and provide the
capacity for the Department to sanction or bar sponsors found not to have complied with their
sponsorship obligations or other legislative requirements, such as by failing to provide visa holders
with Australian terms and conditions of employment. The nomination process and labour market
criteria would provide the capacity to limit the visa to specific occupations, or to impose a `labour
market testing' requirement. This option would require changes to the Migration Regulations 1994
and would incur start-up and ongoing costs to industry. Industry would need to be educated on the
new regulatory requirements and would need to make changes to existing practices to
accommodate them. There is a risk that the changes to the Regulations would not be approved for
commencement on 30 June 2014.
4.2 A `light-touch' regulatory option
Offshore resources industry representatives have consistently stressed during consultations that,
should workers in the offshore resources industry be required to hold a visa from 30 June 2014, the
visa should provide flexibility and stability to ensure continued investment in the Australian
resources sector. Additionally, the additional regulatory requirement should not cause project delays
or significantly increase project costs. It may be possible, with some amendments, to use existing
visa products that are already familiar to industry and which provide work rights for non-citizens in
the migration zone without the imposition of an employer sponsorship framework and the
attendant obligations which apply to an employer-sponsored work visa. While `light-touch' in
intention, this option would also require changes to the Migration Regulations 1994 and would incur
start-up and ongoing costs to industry, though less than the `status-quo' option. Industry would
need to be educated on the new regulatory requirements and would need to make changes to
existing practices to accommodate them. There is a risk that the changes to the Regulations would
not be approved for commencement on 30 June 2014.
Light-regulation option - a variation of the visa requirements to commence on 30 June 2014
Regulatory Burden and Cost Offset (RBCO) Estimate Table
Average Annual Compliance Costs (from Business as usual)
Costs ($m) Business Community Individuals Total Cost
Organisations
Total by Sector -$0.169 $ -$0.09 -$0.26
Cost offset ($m) Business Community Individuals Total by
Organisations Source
Agency $ $ $ $
6
Within portfolio $ $ $ $
Outside $ $ $ $
portfolio
Total by Sector $ $ $ $
Proposal is cost neutral? yes X no
Proposal is deregulatory X yes no
Balance of cost offsets $(0.260589)
4.3 Repeal of the ORA Act
Repealing the ORA Act prior to its commencement would give the most certainty to the offshore oil
and gas industry and to the individuals employed in undertaking offshore resources activities. In
effect, nothing would change. Industry and individuals would not need to educate themselves on
any new regulatory requirements and there would be no additional compliance and administrative
costs that would need to be met by industry and individuals in order to comply with the ORA Act.
There is a risk that the legislation to repeal the ORA Act would not be passed.
7
Full repeal of the Act - repeal of the visa requirements to commence on 30 June 2014
Regulatory Burden and Cost Offset (RBCO) Estimate Table
Average Annual Compliance Costs (from Business as usual)
Costs ($m) Business Community Individuals Total Cost
Organisations
Total by Sector -$0.171130 $ -$0.102600 -$0.273730
Cost offset ($m) Business Community Individuals Total by
Organisations Source
Agency $ $ $ $
Within portfolio $ $ $ $
Outside $ $ $ $
portfolio
Total by Sector $ $ $ $
Proposal is cost neutral? yes X no
Proposal is deregulatory X yes no
Balance of cost offsets $(0.273730)
5. Consultation
5.1 History of Consultations
Extensive consultations have occurred with all affected stakeholders since the Federal Court decision
Allseas in May 2012.
5.1.1 Consultation - pre-July 2013
Following the Allseas decision, the then Department of Immigration and Citizenship established the
Migration Maritime Taskforce (the Taskforce) to assess the implications of the Allseas case, and to
make recommendations to the government on how it should respond. As part of this process, the
Taskforce undertook consultations with a range of organisations, including offshore resource
industry groups, maritime unions, the migration advice profession, Commonwealth government
agencies, and the Western Australian State government.
Following the introduction of the Migration Amendment (Offshore Resources Activity) Bill 2013 to
the Senate, the Bill was referred to the Legal and Constitutional Affairs Committee (the Committee)
for examination in June 2013. As a result, hearings were to enable relevant stakeholders were able
to provide testimony to the Committee, and to lodge submissions on the specific provisions of the
8
Bill. Organisations which appeared before the Committee, or lodged submissions with it, included
offshore resource industry groups, maritime unions, the migration advice profession, academics, and
Commonwealth government agencies.
5.1.2 Consultation - November-December 2013
In November and December of 2013, the Department of Immigration and Border Protection
undertook further consultations on the introduction of the ORA Act, including on the potential
implementation of a visa pathway for those persons affected by the commencement of the
amendments. The following organisations were consulted:
Australian Shipowners Association
Australian Petroleum Production and Exploration Association
Australian Mines and Metals Association;
Maritime Union of Australia;
Australian Maritime Officers' Union;
Australian Institute of Marine and Power Engineers;
Migration Institute of Australia; and
Ernst & Young.
5.2 Stakeholder views
The offshore resources industry has consistently argued that the costs of complying with the
ORA Act, and the visa arrangements associated with this, would impose an unnecessary and
disproportionate regulatory burden and increased cost pressures on the industry, and threaten the
feasibility of current and future offshore resource development projects. They have particularly
stressed the undue administrative burden and adverse impact that a highly regulated visa (closely
modelled on the subclass 457 visa, for example) comprising a sponsorship framework, labour market
and salary criteria, would have on employers.
Unions have continued to support the ORA Act and the offshore resources industry remain opposed
to its introduction. Most recent consultations have been on the nature of the visa, not the nature of
the Act, but have confirmed no shift in the views of major stakeholders.
6. What is the Best Option
6.1 Best Option
Repeal of the ORA Act would provide the greatest certainty to business and individuals engaged in
offshore resources activities as it would involve no change to existing arrangements and provide
ongoing certainty regarding the relationship between the migration zone and the offshore resources
industry, consistent with the Allseas decision.
The introduction of a visa requirement would only create red tape in order to confirm the status of a
foreign national in the migration zone.
9
7. Implementation and Evaluation
Following Parliamentary consideration of the Migration Amendment (Offshore Resources Activity
Act) Repeal Bill 2014, the Department will prepare an implementation plan focused on
communication with relevant industry stakeholders.
10
Attachment B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Migration Amendment (Offshore Resources Activity) Repeal Bill 2014
This Bill is 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 2011.
Overview of the Bill
The purpose of the Bill is to repeal the Migration Amendment (Offshore Resources Activity)
Act 2013 (the ORA Act).
The ORA Act was an initiative of the former Government and was intended to amend the
Migration Act 1958 (the Act) to provide that persons who participate in, or support, an
offshore resources activity are taken to be in the migration zone for the purposes of the Act.
An offshore resources activity, in relation to an area, means:
a regulated operation (within the meaning of section 7 of the Offshore Petroleum and
Greenhouse Gas Storage Act 2006) that is being carried out, or is to be carried out,
within the area, except an operation determined by the Minister in writing; or
an activity performed under a licence or a special purpose consent (both within the
meaning of section 4 of the Offshore Minerals Act 1994) that is being carried out, or
is to be carried out, within the area, except an activity determined by the Minister in
writing; or
an activity, operation or undertaking (however described) that is being carried out, or
is to be carried out:
o under a law of the Commonwealth, a State or a Territory determined by the
Minister for this purpose; and
o within the area, as determined by Minister in writing.
Further, a person in the migration zone to participate in, or support, an offshore resources
activity will be required to hold either a permanent visa, or a visa prescribed by the
regulations for this purpose. This amendment takes effect from 30 June 2014.
The purpose of the ORA Act was to expand the application of the migration zone to all
offshore resources activities and operations within Australia's offshore maritime zones with
the specific aim of regulating the employment of overseas workers in the industry by way of
a visa.
However, consistent with the Government's policy of removing unnecessary and
disproportionate regulation impacting on industry, the Government has decided it will seek to
repeal the ORA Act before it commences on 30 June 2014. This would in effect maintain the
1
status quo by removing the need for those persons affected by the amendments to hold a valid
visa and comply with relevant visa conditions should the ORA Act commence on
30 June 2014.
Human rights implications
The proposed repeal of the ORA Act has been assessed against the seven core international
human rights treaties.
As the ORA Act has not in fact commenced, its proposed repeal will in effect maintain
existing arrangements in relation to offshore resources activity in Australia's territorial sea,
contiguous zone, exclusive economic zone or the waters above its extended continental shelf.
The Bill therefore does not engage any of the applicable human rights or freedoms.
Conclusion
The Bill is compatible with human rights as it seeks to continue existing arrangements and as
such, does not raise any human rights implications.
The Hon Scott Morrison MP, Minister for Immigration and Border Protection
2