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FactCheck Q&A: can foreign seafarers be paid $2 an hour to work in Australian waters, under laws passed by Labor?

Employment Minister Michaelia Cash and the opposition’s Penny Wong appearing on Q&A with host Tony Jones. Q&A

FactCheck Q&A: can foreign seafarers be paid $2 an hour to work in Australian waters, under laws passed by Labor?

The Conversation is fact-checking claims made on Q&A, broadcast Mondays on the ABC at 9:35pm. Thank you to everyone who sent us quotes for checking via Twitter using hashtags #FactCheck and #QandA, on Facebook or by email.


Excerpt from Q&A, March 7, 2016.

MATTHEW LAWRENCE (audience member): I’m an unemployed Australian merchant seafarer. Why would any government in their right mind replace tax paying Australian seafarers with exploited foreign seafarers working on 457 visas, working for as low as $2 an hour?

… MICHAELIA CASH: Thank you very much for the question. Just to be sort of sure here, everything that you are referring to is currently happening under the legislation that the Labor Party brought in, in 2012…– Federal Minister for Employment and Women, Michaelia Cash, responding to audience member Matthew Lawrence on Q&A, March 7, 2016.

For Australian miners, manufacturers or other firms, it can be cheaper to send cargo by sea – from one Australian port to another – than sending it by road or rail.

On Q&A, an unemployed merchant seafarer said Australian seafarers could replaced by foreign seafarers working on 457 visas, working for as little as $2 an hour.

The question came after the Maritime Union of Australia (MUA) had spent weeks trying to get a question put to the panel on seafaring jobs. According to the MUA, audience member Matthew Lawrence is a union member.

This has been a controversial issue for months, after the government granted aluminium producer Alcoa a temporary licence in 2015 to use a ship crewed by foreign workers to transport alumina between Western Australia and Victoria. The firm wanted to use the foreign-manned vessel for the domestic route after selling its own ship, the ageing MV Portland.

The union protested the granting of the temporary licence, saying Australian workers may have been able to do the job. Alcoa said it sought a quote for the job from a company with Australian-flagged ships, but received no reply.

The Federal Court ruled in 2015 that while there were problems with the way the government notified interested parties about Alcoa’s application, the licence remained valid.

The issue was debated at length on Q&A and you can read the comments in context in the transcript here.

This FactCheck aims to answer two key questions about what’s allowed under Australian law:

  • Can foreign seafarers on as little as $2 an hour work on domestic shipping routes in Australian waters?
  • And was Employment Minister Michaelia Cash right that this is allowed under legislation passed by Labor in 2012?

Can foreign seafarers on $2 an hour work on domestic shipping routes in Australian waters?

It is true foreign crew on roughly US$2 an hour can work on domestic shipping routes in Australian waters – though only under certain conditions.

But it is wrong to say this can happen using 457 visas.

The Coastal Trading (Revitalising Australian Shipping) Act 2012, passed by the Gillard government (and supported by the Maritime Union of Australia), allows for the granting of temporary licences, subject to certain conditions.

These temporary licences allow companies to use foreign ships and foreign crews working under a special purpose visa to transport goods between Australian ports.

These foreign workers can be paid under “existing international arrangements” for the first two domestic voyages in Australian coastal waters.

What’s that mean in wage terms? Brandt Wagner, head of the Transport and Maritime Unit at the International Labour Organisation, an agency of the United Nations in Geneva, told The Conversation by email that:

The current minimum monthly basic pay or wage figure for able seafarers, which became effective on January 1, 2016, is currently US$614. The International Labour Organisation does not refer to an hourly figure but only the monthly figure.

The International Transport Workers’ Federation says a typical able seafarer may work around around 263 hours a month (40 hours a week plus 103 hours of overtime).

That gets you an average hourly rate of around US$2.33 (roughly A$3.11 in Australian dollars). A little over, but not far off the figure cited by Matthew Lawrence on Q&A. This rate is well below the Australian award wage.

Dean Summers, an inspector with the International Transport Workers’ Federation (ITF), said the ITF was aware of a foreign-flagged vessel working in Australian waters that paid close to $US2 an hour for foreign seafarers working on the vessel.

The already paltry wage is not a requirement and there are many ships trading on our coast that are not paying the US$2.10 figure as it is not regulated… The reality is that there are zero minimum wages for international seafarers. The international shipping lobbyists quote an International Labor Organisation minimum rate of US$1000 per month but that is a voluntary figure and completely unenforceable in any jurisdiction.

You can read his full response here.

Under the law, however, a temporary licence holder is allowed to use foreign crews paid under existing international arrangements for only the first two domestic voyages per temporary licence granted.

A spokesman for Employment Minister Michaelia Cash told The Conversation by email that:

The true situation on foreign worker wages is that when a foreign vessel operates domestically (which can only happen under a temporary licence), the crew are paid under whatever existing international arrangements apply on that vessel for the first two domestic voyages only. From the third domestic voyage onwards, crew on foreign vessels must be paid no less than the Australian Award. The Australian Award (set by the Fair Work Commission) expressly includes pay rates for workers on foreign vessels … Any suggestion that temporary licences are being used to engage a foreign crew on $2 an hour as a permanent replacement for Australian crew is wrong and nothing more than a scare campaign of misinformation being run by the MUA and Labor.

You can read the spokesman’s full response here, as well as a comment from a spokeswoman for Opposition Senate Leader Penny Wong, who was part of the same Q&A discussion.

So yes, foreign seafarers working for roughly US$2 an hour can work on ships moving cargo between Australian ports, as long as it’s on a foreign vessel operating under a temporary licence. But this can only happen on the first two domestic voyages.

Was the minister right that this is allowed under legislation passed by Labor in 2012?

The short answer is yes, Senator Cash is right.

As established above, the Coastal Trading (Revitalising Australian Shipping) Act 2012 passed by the Gillard government expressly allows for companies to apply for a temporary licence to use a foreign ship with a foreign crew moving material from one part of coastal Australia to another.

Among the objects of the Act is promotion of a viable shipping industry that contributes to the broader Australian economy and facilitation of the long term growth of the Australian shipping industry.

The work must first be advertised locally to give local ships an opportunity to respond to the work.

So why is this even up for debate? It’s because in the MV Portland case, the Maritime Union of Australia argued in court that problems with the way Alcoa’s application for a temporary licence was advertised may have put local operators at a disadvantage.

The Federal Court decided while the government didn’t publish the notice in compliance with the law, the temporary licence was still valid.

Verdict

Foreign seafarers working for roughly US$2 an hour can work on ships moving cargo between Australian ports, as long as it’s on a foreign vessel operating under a temporary licence. But this can only happen on the first two domestic voyages.

It is wrong to say this can happen using 457 visas.

The minister was right to say those foreign seafarer and temporary licence rules are covered by the legislation passed by the Labor government in 2012. – Joanna Howe


Review

This is a sound analysis. The author correctly notes that the current law, passed under the last Labor government in 2012, does allow for firms to apply for and be granted temporary licences that allow the use of foreign-manned vessels to transport goods from one Australian port to another. This is subject to conditions, including that the work be advertised locally first and that the licence holder use foreign workers for no more than the first two domestic voyages undertaken under the licence.

Given the International Labour Organisation puts the minimum wage for able seafarers at US$614 a month, and given that a standard month of work would be around 260 hours, it is fair to say this works out at an average wage of between US$2 and US$3 an hour. – Tess Hardy


UPDATE: This story was updated at 11.04am AEST on March 15 to include quotes from a spokesman from the International Transport Workers Federation, and a link to his full response here.

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