Big business has pleaded with Federal Labor MPs not to retreat on allowing overseas workers for mega resource projects after a minister admitted internal squabbling had left the Gillard Government looking "dreadful".

In a highly unusual move ahead of today's Labor caucus meeting, the chief executive of the Business Council of Australia, Jennifer Westacott, wrote to every Labor MP and senator yesterday urging them to stand by the policy.

Union bosses and members of the party's Left are clamouring for Julia Gillard to overhaul the enterprise migration agreement system which last week saw Gina Rinehart's company Hancock Prospecting given permission to import up to 1715 skilled and semi-skilled workers for her $9.5 billion Roy Hill project in the Pilbara.

Ms Westacott said the "carefully crafted" EMA policy - developed by a task force headed by WA frontbencher Gary Gray in 2010 - was vital to ensure skill shortages did not prevent projects going ahead.

Her comments reflect fears in the resources sector that the uproar caused by the Roy Hills EMA will see the Government retreat from the policy.

Immigration Minister Chris Bowen's decision caught the Prime Minister on the hop last week. The episode has stoked leadership chatter, with many MPs disappointed the PM's instinct was not to defend the EMA policy and stare down the union bosses.

Mr Gray, the Special Minister of State, conceded yesterday that failure to communicate the arrangement to Ms Gillard had undermined the selling of the policy.

Chevron's $43 billion Gorgon project is next in line to get EMA approval. The Wheatstone natural gas project, also off the WA coast, is also likely to be built with the help of foreign workers.

Mr Gray said EMAs were needed because there were not enough skilled workers.

Opposition immigration spokesman Scott Morrison said Mr Bowen did not have to convince the coalition of the policy's benefits. "The minister has to convince his own Prime Minister and his Government," he said.

Meanwhile, the Department of Immigration is investigating claims that hundreds of Chinese workers on the $5.4 billion Sino iron ore project in the Pilbara are being paid half the wages Australian workers on the site are getting.

The Chinese workers are alleged to be getting $70,000 to $80,000 for jobs that Australian workers would be paid around $150,000 for.

It is the first investigation by the department into alleged underpayment at the Karratha site, which is being built by Hong Kong's CITIC Pacific.

The West Australian

Popular videos

Compare & Save

Compare & Save

Follow Us

More from The West