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The Fair Work Ombudsman detects too few employers who underpay their workers and can only hand out weak penalties to those that get caught.
Those are the findings of a Grattan Institute report that says recent migrants are most likely to be taken advantage of, and recommends stronger visa rules to protect them, beefing up the ombudsman’s powers to fine underpayers, and tougher penalties to deter worker exploitation.
The Grattan report says the Fair Work Ombudsman needs stronger teeth and worker visas need reform to stop exploitation.Credit: Bloomberg
Grattan Institute economics policy program director Brendan Coates said up to 16 per cent of migrant workers and 9 per cent of all workers were paid less than the national minimum wage.
“Workers in their twenties are six times as likely to be underpaid as workers in their thirties, which is why just reforming the penalties or just changing the visa rules won’t do enough,” he said.
“We need to undertake a series of reforms to root out systemic exploitation of workers in Australia.”
Home Affairs Minister Clare O’Neil said the migration system was a mess when Labor took office last year.
“That is why we are implementing a once-in-a-generation series of reforms that will work to address problems surrounding worker exploitation that the Grattan Institute has identified,” she said. Employment Minister Tony Burke was approached for comment.
Grattan found the Fair Work Ombudsman could only issue fines for record-keeping breaches, and the amount it collected in penalties had halved since 2018 to $4 million in 2021-22.
That compared to $27 million in penalties collected by the country’s WorkSafe bodies and $3 billion in fines collected by the Tax Office.
Coates said strengthening the ombudsman was critical to improving workers’ lives.
“These violations make a mockery of Australia’s workplace laws and it’s clear that we’re not taking the enforcement of those laws seriously enough,” Coates said.
“How [many] fewer workers would be underpaid if the government was as tough on employers who underpay their workers as it is on people who cheat on their taxes?”
The report found the underpayment of migrant workers undermined both the visa system and compliance with workplace laws.
It recommended reforms including limiting working holidaymakers to a one-year visa, abolishing the rule that permits them to extend their stay in exchange for doing “specified work” such as fruit picking, and making visas issued through the Pacific Australia Labour Mobility scheme portable.
The government has started work in this space, including by increasing the temporary skilled migration income threshold from $53,900 to $70,000. Grattan has previously found that a too-low threshold opened up migrants to exploitation.
Coates said raising the minimum pay for temporary migrant workers was a good first step, but more visa reform was needed.
The budget forecast net overseas migration would swell to 1.5 million people over the next five years, 400,000 of whom are forecast to have arrived this financial year. Students are expected to make up almost half the intake.
The federal government has faced pressure from the Coalition about the migration projections and the infrastructure needed to support that increase.
“In the May budget, the government made further cuts to infrastructure and referred hundreds of congestion-busting projects to yet another infrastructure review. Yet the government’s own budget papers say a further 1.5 million people will come to Australia over five years,” Liberal MP for Flinders Zoe McKenzie said in question time on Tuesday.
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