The resources industry claims hundreds of workers on oil and gas rigs and support ships will be forced to stop work after the Senate killed off the Federal Government's offshore visa regime.
In a major embarrassment to the Government, Labor and the Palmer United Party last night supported a Greens motion to strike out regulations dictating what kind of visas can be used by foreign workers on offshore rigs and ships.
The Government insists that the immediate effect is that hundreds of foreign workers on oil and gas installations are in breach of their visas and cannot work.
Labor said it supported the Greens because the Government was using a special class of visa, known as the Maritime Crew Visa, to bring in foreign workers on lower wages and tougher conditions.
Maritime Union of Australia national secretaary Paddy Crumlin told the ABC the maritime crew visa was a loophole being used to exploit workers.
"It was here to bring in Filipino, Indonesian seafarers, not on Australian wages and conditions," he said.
The Australian Mines and Metals Association blasted Labor and the Greens, saying they had created chaos in the resources industry and damaged Australia's reputation as a safe place to invest.
According to AMMA, the immediate effect of the vote was that 150 Australian workers on a specialist offshore construction vessel would be stood down because 70 non-Australian workers could not legally do their jobs.
The association claimed an entire offshore production rig might have to shut because a foreign supervisor would not be permitted to do his job.
"Skilled migrant workers comprise a tiny minority of jobs in the offshore oil and gas sector but their specialist, international skills are critical to delivering jobs for Australians," AMMA executive director, policy and public affairs, Scott Barklamb said.
"The disallowance impacts every offshore resources project in Australia - projects worth $200 billion to our economy and that employ upwards of 70,000 Australian people."
Labor MP Alannah MacTiernan said the issue was about Australians being given the best chance of winning jobs on offshore vessels.