The Senate on Tuesday passed a motion put forward by Labor and the Greens to establish the new inquiry, which will report its findings in late June.

Last year, Assistant Minister for Immigration and Border Protection, Michaelia Cash, commissioned a review of the 457 visa program to ensure it was being properly used.

The recommendations from the panel commissioned to conduct the inquiry were released earlier this month and included the need for greater transparency and a better system to target employers who misuse the program.

The Australian Industry Group said the new inquiry was "a waste of Senate time and resources".

But the Greens and Labor said a Senate inquiry was necessary because the government-commissioned investigation had not gone far enough. It had focused on the impact of the system mainly on local workers, as opposed to overseas workers. The focus of the government inquiry was the 457 visa program, while the Senate inquiry would look at a broader range of temporary working visas.

Unions welcomed the new inquiry saying it would be a positive step towards ensuring foreign workers are not exploited.

ACTU president Ged Kearney said the inquiry would also look at whether employers are genuinely trying to hire Australian workers first.

"With unemployment sitting above six per cent and youth unemployment at around 14 per cent, the government should be strengthening the rules for employers to hire local workers and investing in skills and training," she said.

"Across the country we are seeing employers cutting apprentice numbers and graduate nurse positions as well as their investment in training, then complaining they are unable to find skilled workers as a justification for bringing in workers on 457 visas.

"Australia's migration program should not be at the beck and call of big business."

The Senate Inquiry will investigate issues including the extent of exploitation and mistreatment of people on temporary work visas and the impact the visa program has had on employment opportunities, skills and training development for Australians.

Unions say they support permanent skilled migration but are concerned foreign workers on temporary visas are being exploited and that unscrupulous employers are rorting the scheme at the expense of Australian jobs.

Ms Kearney said around 1.1 million people were on a range of temporary work visas.

Greens deputy leader and workplace relations spokesperson Adam Bandt said that "with rising unemployment and a mining investment boom coming off the boil, now is the time to ask whether the current working visa system strikes the right balance".

"Youth unemployment is now at 14 per cent and we're not investing enough into training or creating sustainable jobs," he said.

"We may wake up when the mining boom is over to find out that we've missed an opportunity to skill up locals.

"With persistent reports of overseas workers being exploited, there is a very real risk that we are carving out whole areas where Australian minimum conditions aren't being enforced."

Foreign worker Dely Rose Alferez said she was being underpaid and was charged a visa fee which her employer was supposed to pay.

The employer, who she no longer works for, had nominated her to work in Australia.

Ms Alferez, who came to Australia from the Philippines on a student visa in 2009, was later sponsored by an employer as an aged-care nurse.

"My employer was fine but the salary was incorrect," she said.

The chief executive of the Australian Industry Group, Innes Willox, said an independent review into the integrity of the 457 visa program last year has already thoroughly examined much of the ground to be covered in the proposed Senate inquiry.

"It found no evidence to back the claims made of widespread rorting of the program and made numerous suggestions for policy changes which have been adopted by the government and that address many of the areas of concern to the Senate," he said.

"Yet another review into the 457 program would be unnecessary and wasteful. The small number of abuse cases that occur are dealt with appropriately under existing laws and regulations.  It is disappointing that the Senate has decided to spend more time chasing down the myth of widespread abuse under the 457 program.

"That furphy is now settled and the recent toughening of the 457 rules will make abuse even rarer than it is already, "

When she released the findings of the government-commissioned inquiry earlier this month, Ms Cash said the government would introduce a penalty making it unlawful for sponsors to receive a payment in return for their sponsorship of workers on 457 visas.

She said the Department of Immigration and Border Protection would also work with the Australian Taxation Office to ensure workers on 457 visas are receiving their nominated salary and are not undercutting Australian workers.

Ms Cash said on Tuesday the Senate inquiry was politically motivated by people who are "fundamentally opposed to the 457 skilled migration program".

"Just last week, the government released its response to the independent inquiry into the integrity of the 457 program, chaired by Mr John Azarias," she said

"This was a comprehensive inquiry that consulted extensively across Australia, meeting over 140 stakeholders face-to-face and considering in excess of 189 written submissions, including from businesses, unions, industry bodies and academics.

"The independent panel found no evidence of widespread rorting."

A spokeswoman for opposition immigration spokesman Richard Marles said the independent inquiry had not fully explored the extent of exploitation of foreign workers under all available temporary visas.

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