With a significant number of large mining and energy projects in development, many in isolated locations lacking community infrastructure and an accessible labour-supply, Australian project owners face significant challenges in sourcing skilled workers to construct, develop and operate projects.  In this climate, the Australian Federal Government recently launched a controversial new scheme to allow workers from outside Australia to be brought in to work on 'significant' resources projects.

In May 2012, the Australian Federal Government announced a new temporary immigration initiative: Enterprise Migration Agreements (EMAs) aimed at addressing the skills shortage in the resources sector.  EMAs can be negotiated between the project owner and Federal Government to allow for foreign workers to be employed on significant resources projects.  The use of an EMA will allow the project owner certainty in terms of workforce planning and the ability to access overseas workers.

EMAs are applicable to 'significant' projects only

EMAs are only available for projects with a peak workforce of more than 1,500 people and capital expenditure of greater than AUD2 billion.

Requirement for comprehensive training plan

One of the requirements for EMA approval is the development of a compressive training plan to show how the project will invest in training or "up-skilling" to allow Australians to meet future skill-levels required in the resources sector. The training plan should include goals to measure training for the development of people with relevant skills in occupations where there are or expected to be shortages. The project owner must also include in the training plan commitments to reducing reliance on foreign labour over time and must demonstrate that the training strategies to be applied are commensurate with the number of workers from outside Australia used on the project. Other requirements for the detailed training plan include that it show how training targets will be enforced though the project owner's contracting model and monitored over the life of the EMA.

Efforts to recruit in Australia and the Federal Government 'Jobs Board'

The workforce participants allowed to come from outside Australia under an EMA must be supplementary to local Australian labour and the project employer must demonstrate "effective, genuine and ongoing local recruitment efforts". In late May 2012, the Federal Government announced a new Resources Sector Jobs Board to display job vacancies in the resources sector. The Jobs Board will allow Australian workers to apply for positions at projects with an EMA, while allowing EMA holders a facility to show they have made genuine attempts to source required labour from the Australian jobs market.

Terms and conditions of an EMA

Each EMA will contain the terms and conditions under which workers from outside Australia will be engaged on the resources project, including the relevant occupations, necessary qualifications of the foreign workers and required English language skills. The new arrangements will allow for sub-contractors on a project to adopt labour agreements under the terms of the EMA, which will allow the sub-contractors to sponsor workers under the EMA. Approval of the project owner/EMA holder is required for this sub-contractor participation.

457 visas required

Employees from outside Australia under an EMA will need to hold 457 visas and the employer - whether the project owner or sub-contractor signed-up under the EMA - will need to comply with the usual sponsorship requirements and workers will receive the usual protections under the Worker Protection Act 2009. For example, salaries must be in accordance with Australian market rates and conditions the same as for Australian employees working in the same location. Sub-contractors are required to satisfy the training benchmark requirements under the 457 visa programme, consistent with the specific training plan for the project, with the choice of paying 2% of payroll to a relevant industry training fund or investing 1% of payroll on training activities for the sub-contractor's own Australian employees.

The Roy Hill EMA and others to follow?

The first EMA was approved by the Federal Government in late May for Hancock Prospecting's AUD9.5 billion Roy Hill iron ore project located in the Pilbara region of Western Australia. Under the Roy Hill EMA, up to 1,715 workers - about 20% of estimated construction workforce - can be hired from overseas to work as temporary overseas workers on the project.

It has been widely reported in the Australian press that Chevron is currently negotiating the second EMA in respect of its AUD43billion Gorgon LNG project also in Western Australia and that other energy companies in the LNG sector are carefully considering the use of EMAs.

While mining and energy project proponents can clearly see the benefits of EMAs in helping to address the skills shortage in Australia, the introduction of EMAs has not been without controversy. Significant criticism has come from unions and some politicians with concerns ranging from: that workers for Australia's resource projects should be sourced from within Australia, particularly from areas of high unemployment; to comments about the potential exploitation of foreign workers and concerns about their welfare.

At the time of writing, the Australia Greens' Adam Brandt had put forward a Private Member's Bill for changes to the EMA scheme, including new conditions to require the employment of specified numbers of Australian residents from indigenous groups, people living near the project, people from regions with high rates of unemployment and people recently retrenched.

With the demand for skilled workers in the Australian resources and energy sector widely predicted to be ongoing, the use of EMAs is at least currently one option project owners can consider using.