The resources and powers available to the Fair Work Ombudsman Natalie James were the subject of conflicting recommendations. Credit:Jesse Marlow They forced us to leave the premises, otherwise they said they would charge us with trespassing. So we moved to a motel that night. They were planning to ship us out of the country to avoid any troubles," De Castro told a Senate inquiry into foreign worker exploitation. Stories like De Castro's are all too common in industries where foreign workers on temporary visas are used. Risk to economy With 1.3 million foreign workers on visas, equivalent to one in 10 workers, it is becoming a big problem that could easily get out of control if it isn't addressed.

In most cases the workers are too afraid to speak out for fear of being deported or are threatened that they will put their families at risk back home. A scandal at 7-Eleven was a key focus of the inquiry. Illustration: Simon Bosch Credit:Simon Bosch Over the course of a year and 10 public hearings, the Senate inquiry, chaired by Senator Sue Lines, heard first hand evidence from victims, regulators, unions and academics, outlining cases of wage fraud, worker exploitation and in some cases slavery. It has now released a report with the apt title "A National Disgrace: The Exploitation of Temporary Work Visa Holders". Some of the recommendations are highly controversial, some are obvious, but everyone agrees that the current situation can't – and shouldn't – go on.

It cites a survey by United Voice found that of more than 200 international students, 25 per cent were receiving $10 or less an hour, 60 per cent were earning less than the national minimum wage and a massive 79 per cent knew little or nothing about their rights at work. Controversial proposals The more controversial recommendations relate to labour hire companies and the $170 billion franchise industry. A key recommendation is that Treasury and the ACCC review the franchising code of conduct and "whether there is scope to impose some degree of responsibility on a franchisor and the merits or otherwise of so doing". This follows a joint media investigation of the country's biggest convenience store chain and franchise network 7-Eleven, which found systemic wage fraud and fabrication of payroll records across the 620 franchised stores. The Senate didn't pull any punches. Armed with stinging criticism from Professor Allan Fels, the committee didn't buy arguments from billionaire and 50 per cent owner Russ Withers that "the 7-Eleven model had a 38-year track record as a very viable system".

The report said: "evidence to this inquiry challenged the notion put forward by 7-Eleven that it was unaware of the racket that its franchisees were running. The committee shares the view of many submitters and witnesses, that the protestations by the former chairman of 7-Eleven and other senior executives that they were simply unaware of the mass underpayment of employees defy belief". It went further and said it was "wary of what appears to be a well-oiled public relations exercise that seeks to distance 7-Eleven from the practices of its franchisees". The brutal reality is the franchise code needs to be revisited and franchisors do need to be more accountable for what their franchisees are doing. Labour hire reform needed Labour hire companies also need to be held accountable for their actions, as outlined during the Senate hearings.

In one case, the inquiry was told about a 417 visa scam where workers at a meat processing facility did a six-week training course and "get paid nothing". Once the training was completed, they worked up to18 hours a day, six days a week. "They were frequently denied proper breaks and often had to keep working or return to work early after suffering workplace injuries," the inquiry was told. To this end, the opposition and crossbench members of the committee recommended introducing a licensing regime for labour hire contractors and that a business can only use a licensed labour hire contractor to procure labour. "There should be a public register of all labour hire contractors. Labour hire contractors must meet and be able to demonstrate compliance with all workplace, employment, tax, and superannuation laws in order to gain a licence. In addition, labour hire contractors that use other labour hire contractors, including those located overseas, should be obliged to ensure that those subcontractors also hold a licence."

The committee said there was "pervasive abuse of the working holiday visa program by a network of labour hire companies supplying 417 visa workers to businesses in the horticulture sector and the meat processing industry". But the recommendation wasn't unanimous. The Coalition senators on the panel, including Senator Bridget McKenzie, disagreed on the basis "it would punish those labour hire firms which are already complying with relevant laws". Time for accountability The Senate also looked at the role of the Fair Work Ombudsman and whether it had adequate resources and tough enough penalties to control systemic wage fraud and worker abuse of foreign workers. Instead of making its own recommendations to address the shortcomings, it called for a government review of the resources and powers of the Fair Work Ombudsman to be completed by October 30 by an independent tripartite panel.

The Coalition senators criticised this recommendation as "a review recommending another review". It is a fair comment. Equally, saying it was a matter of policy for the incumbent government, not an independent tripartite panel, is a recipe for inaction. Worker exploitation is a national disgrace. In the quest to offer customers cheaper prices and services – and KPIs focused on the bottom line – there has become a race to the bottom. Some big companies have been hiding behind supply chain abuses by using labour hire firms or sub-contractors. Franchisors point the finger at a few rogue franchisees. Corporations need to be held accountable for misconduct by their contractors or sub-contractors and franchisees.