An economics and employment expert has lashed out at the government’s construction industry watchdog, saying the body ineffectively regulates migrant worker mistreatment through sham contracting.

This year’s federal budget committed to absorbing 16,300 foreign workers into the labour industry, causing economists and unionists to fear incidences of sham contracting will increase. The government made its commitment in light of the gaping skills shortage in Australia’s trades industry, predicted to soar to 36,000 by 2015.

The Fair Work Ombudsman says contracts are shambolic when an employer “misrepresents” the worker’s employment status and sidesteps obligatory employment rights and entitlements. Critics have raised particular concerns over employers paying independent contractors flat rates and denying superannuation, job security or work safety insurance to workers in the high-risk industry.

An Australian Building and Construction Commission’s (ABCC) spokesperson told Crikey the commission supports the Fair Work Ombudsman’s endeavours to terminate sham contracting, saying employers sometimes underpaid workers due to “miscalculations”.

But economics professor William Mitchell, of Newcastle University, says he has “zero faith” in the ABCC’s handling of illegal and shambolic contracts. He describes the commission as a “farce” organisation erected by the Howard government to take down construction unions and has been maintained by today’s Labor governments.

On Tuesday, a UnionsWA media release exposed the exploitation of 20 Chinese migrant workers employed by Diploma Constructions to work without payment on an apartment building project for up to eight weeks. Workers are still awaiting payment and the union is attempting to untie red tape concealing which party is responsible for wage payment as multiple recruiters were involved.

Figures reveal more than 168,000 people are employed on sham contracts in Australia. Amnesty International says migrant workers are the most vulnerable workers due to their powerlessness to negotiate employment terms and a lack of knowledge about the legal system.

Amnesty is urging the government to sign the United Nation’s Migrant Workers Convention — which provides guidelines to protect migrant worker rights — and a spokesperson says it will launch a global campaign to address the issue later this year.

“In Australia, as in other developed states, there has been a clear lack of political will to protect the rights of migrant workers to date,” Amnesty declared in a statement at the 2009 convention.

Mitchell says construction employers and companies should also play a role in regulating their industry: “I think the Master Building Association has a responsibility to represent the industry as a whole. If there was a tax on their industry they’d be screaming from the top of their towers.”

Building and construction industry and employers representatives, the Master Building Association,  rejected Crikey’s request for comment.

In recent months the ABCC has clashed with the union on the picket line and in the courtroom. In July, commission came under fire for “wrongfully arresting” workers in South Australia. The commission has also slapped an injunction on the Construction Forestry Mining and Energy Union (CFMEU), preventing it from speaking to media about the Perth migrant worker debacle (UnionsWA can discuss the matter freely).

“The record on that commission is one of shame on our industrial relations history. The legislation that underpinned that commission provided penalties in that industry that no other industries had to bear,” Professor Mitchell told Crikey.

A case in April this year against an ACT construction company involved in sham contracting was the first incidence where the ABCC enforced the Fair Work Act 2009 sham contracting guidelines.

“If [migrants] want to come into the country they’ll often be in a position of taking anything they can get,” UnionsWA spokesperson Simone McGurk said. “They are coming here so they can send money back home. So they’re in no position to bargain. If they speak out to their employer and their visas expire because they don’t have a job, they will be sent back home.”

The Fair Work Ombudsman has been active in the area of sham contracting and recently audited the cleaning services, hair and beauty industry. But auditing in the construction industry can be difficult as migrant workers in remotely accessible areas can be hidden from the watchdog’s gaze.

Mitchell demands that the government abolishes or reduces independent contracting as a method of employment in the building industry, as regulating workplace agreements has proven to be challenging, particularly in remote areas.

“There’s no oversight or scrutiny done by the government,” he said, “… [and] the lure of a cheap migrant workers, that they can then hold sham contracts over them and exploit them, is very attractive to an unscrupulous employer.”

McGurk fears the government’s introduction of the Enterprise Migration Agreements — a $2 billion project that will speed up the temporary working visa process — will also encourage illegal employment practices.

“When it comes to migrant workers, if they’re on some temporary visa, it’s questionable whether it’s illegal to employ them as subcontractor but that’s not to say it isn’t happening,” McGurk said in relation to the current incident in Perth.