Regulatory Impact Statement - Recognised seasonal employer policy: transitional arrangements, change to permit type and fee adjustments

Executive Summary

Employers in the horticulture and viticulture industries need more time and assistance to transition to Recognised Seasonal Employer (RSE) policy from the previous immigration policies for this sector, the Seasonal Work Permit (SWP) and Approvals in Principle (AIPs).  They also need immigration policy solutions to help them meet short term periods of peak labour demand.  A package of options has been developed to address these issues:

• contract the services of Regional RSE Transition Facilitators for two years
• implement a two-year Transition to RSE (TRSE) policy allowing employers who are working towards using RSE policy to recruit non-New Zealanders from onshore
• allow visitors to vary the conditions of their permits to enable short periods of work in horticulture/viticulture, and
• grant an extra three month stay in New Zealand to working holidaymakers who have already worked three months in horticulture/viticulture.

It is also proposed to make RSE policy a form of Limited Purpose Entry policy.  This has no impact on New Zealand businesses and is therefore outside the scope of this RIS.  Another proposed amendment is a change to the RSE policy fee structure, to better reflect the actual processing costs.

Adequacy Statement

The Department of Labour has reviewed the Regulatory Impact Statement and considers that it is adequate according to the adequacy criteria.

Status Quo and Problem

New AIP applications will not be accepted after 30 September 2007, and the SWP also closes on this date.  Employers are very concerned that they are not yet ready to meet all of their labour shortages through the new RSE policy, however.  RSE policy was introduced in April 2007 and many employers feel they are not yet in a position to use it. 

RSE policy encourages employers to focus on developing the skills and productivity of their workforce, rather than taking a least-cost approach to labour.  Providing employers with access to an offshore pool of motivated workers under conditions that require good employment practices will foster a more planned, investment-based approach to labour.  It requires significant change in the business models and practices of many employers, however, who must:

• plan in advance for the recruitment and employment of workers from offshore
• make provision for training (at least in the first season) of RSE workers
• negotiate employment agreements and establish sound employment and health and safety practices
• in the case of contractors, develop longer-term relationships with growers to ensure that, once RSE workers are in the country, they are fully utilised
• make arrangements for the provision of accommodation
• develop relationships with local Work and Income offices, and
• ensure that pastoral care obligations are met.

For an industry in which a significant number of employers have an established culture of illegality and poor practice, this represents a very steep learning curve.  It is made more challenging by the fact that these changes must occur on an industry-wide basis, to prevent poor employment practices undermining the competitiveness of RSE employers.

Maintaining the status quo would provide the greatest incentive for early take up of RSE policy.  However, many employers already wish to use RSE policy but are not yet in a position to do so.  Depriving them of labour over the transitional period would not necessarily make their transition to RSE any quicker.  Maintaining the status quo would not benefit these employers and could financially impact on this important export industry.

Objectives

The public policy objective is to support the take up of RSE policy while also ensuring that critical labour requirements are met over the next two seasons.  An additional objective is to ensure, into the long term, that there is sufficient labour available to meet short term peaks in horticulture/viticulture labour demand.

Alternative Options

The SWP could be extended for another two years, as originally requested by industry.  This would provide employers easy access to labour for another two years, with no obligations on the employer and no policy requirements to meet.  This option is not preferred because extending the SWP would do little to help employers meet RSE requirements, and would not support take up of RSE policy.

Preferred Option

The preferred solution is to implement a package of options:

• contract the services of Regional RSE Transition Facilitators for two years
• implement a two-year Transition to RSE (TRSE) policy allowing employers who are working towards using RSE policy to recruit non-New Zealanders from onshore
• allow visitors to vary the conditions of their permits to enable short periods of work in horticulture/viticulture, and
• grant an extra three month stay in New Zealand to working holidaymakers who have already worked three months in horticulture/viticulture.

TRSE policy would become available in late November 2007.  Up until the introduction of TRSE policy, employers will be able to sponsor general work permit applications from people already in New Zealand (such as SWP workers).  Any work permits issued under this arrangement would be valid for no more than three months.  This would ensure that employers continue to have access to labour before TRSE policy comes into effect.

The package represents a comprehensive solution to both the transitional issues and the longer term requirement to facilitate access to labour for peak periods (when RSE policy may not be suitable).  The package represents the results of intensive negotiation between officials, industry representatives and the New Zealand Council of Trade Unions (NZCTU), and is supported by all parties to the negotiations.  The impact of this transitional package will be to better support the take up of RSE while ensuing that critical labour requirements are met over the transitional period.  The package will also help ensure that ongoing peak seasonal labour needs are met. 

The only part of the package with any significant compliance costs is the TRSE policy.  However, the employer requirements of TRSE policy would be no more onerous than those required of all employers using temporary work policy in New Zealand.  The sole significant point of difference is that, in the second year, employers need to demonstrate that they are working towards using full RSE policy.  This is important to ensure the policy intent is met.
There are risks associated with this package, particularly relating to the proposed transitional work permit policy.  The risks are that adopting an onshore work permit policy could cause issues with Pacific countries, in relation to the effort they have put into facilitating supply of RSE workers.  TRSE policy could undermine the early take up of RSE policy, undermine the integrity of visitor policy (by attracting non-bona fide visitors) and put Recognised employers who have already organised to recruit from offshore at a cost disadvantage.  These risks will be managed through the policy settings and through the communications strategy. 

The package has minimal impact on the stock of existing regulation.  The regulatory changes required are to implement the appropriate fees so that application processing costs can be covered.  The new fees reflect existing fees, which were determined according to the Department of Labour’s standard fee setting principles:

• $180 for employers to apply for Approval in Principle under TRSE policy (this is the standard AIP fee)
• $200 for a work application under TRSE policy (this is the standard work visa/permit application fee), and
• $120 for the three month extension for backpackers who have worked three months in horticulture/viticulture (the standard Working Holiday application fee).

It is also proposed to reduce the RSE Recognition fee from $1,400 to $700 and to increase the Agreement to Recruit fee from $120 to $180.  Recognition and ATR fees were established on the basis of processing equivalence with the Accredited Employer and Approval in Principle (AIP) applications respectively.  The RSE processing unit, however, has resources available to it that staff processing Accredited Employer applications do not have.  This reduces the processing work required.  Reducing the Recognition fee is therefore consistent with Treasury fee setting principles, as is increasing the ATR fee to match the current AIP fee.

Implementation and Review

If these proposals are agreed, the Department will issue Parliamentary Counsel with drafting instructions for the regulation changes.  Systems changes required to implement the policy initiatives will cost up to $58,500.  The Department will fund the Regional RSE Transition Facilitators for up to $350,000 per annum for two years.

Consultation

The following government agencies have been consulted in relation to this proposal: the Ministry of Social Development, the Ministry of Agriculture and Forestry, the Ministry of Foreign Affairs and Trade, the Ministry of Pacific Island Affairs, the Ministry of Economic Development, NZAID, the Treasury, and the Department of the Prime Minister and Cabinet.  Industry representative bodies including Horticulture New Zealand, Wine New Zealand, the New Zealand Kiwifruit Growers Association, Pipfruit New Zealand and the NZCTU were all closely involved in developing these proposals.