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J Millward submission NRSET
- 4. PART 2 QUESTIONS FOR CONSULTATION Resources sector operations 1. Does the information in this paper provide an accurate outlook for the resources sector? What alternative sources of data will the Taskforce need to examine? FOR COMPANIES: To help the Taskforce address skills and labour needs over the next five years, please supply specific information on your skills needs (including timing and duration) for both existing and planned projects. (Please note: Commercial in Confidence information will be treated appropriately. Please ensure it is clearly marked.) Response: The resources sector can go through significant periods of volatility and the challenge is to keep the data up to date. The Global Financial Crisis saw many companies quickly reduce production and shed staff and quickly ramp up again as prices recovered. Add to this mix mergers and takeovers and the task of keeping data up to date becomes extremely problematic. Listed companies are required to report to the Australian Stock Exchange and significant developments that may affect their share price, including changes to project development timeframes. One way to maintain an accurate data set is to compel resource companies, as part of their obligations for the right to mine, to provide regular updates of their projects including their Strategic Labour Force Plans. This should not be much more onerous than their reporting to the ASX and will contribute to Australia making the most out of the forthcoming boom. The demand for labour and skills 2. What is the best way to identify the skills needs of the resources sector? How do we create the market that allows for the best match between skills and job opportunities? FOR COMPANIES: What are you forecasting as your skills requirements and how will you get them? Response: The resources sector already effectively identifies the skills needs at both the individual and collective level. The gap is in communicating those needs efficiently to job seekers, training providers and recruitment firms. Recently there was an announcement of small coal mine to open near Maryborough, Queensland. Three different local RTOs I have spoken to each have different understandings of the requirements for entry into this coal mine, so what hope does a job seeker have of understanding it? This is not an issue endemic to the resources sector, the training system in recent years has become very complicated, but it is a sector where skill and labour shortages can have a much more significant economic impact. I recommend that the peak bodies, Industry Skills Council and Mining Industry Skills Centre take a more proactive role in facilitating the simple communication of the sector’s requirements to the labour market.
- 5. 3. What is the most appropriate role for the resources sector in meeting its future skills needs? What should be the role of the Australian Government, state governments, enterprises and projects, regions and industry associations in skills formation and labour retention? FOR COMPANIES: From your perspective, are there any barriers to skills formation? If so, what are the solutions? Response: A collaborative strategic approach is required to maximise efficiency in the labour market. As referred to earlier, resource companies should develop Strategic Labour Force Plans to inform themselves and government how to address future skill and labour force needs. Government needs to play a facilitative role, coordinating a strategic approach and providing support as required, for example, boosting apprenticeship places in areas of anticipated demand. 4. What role does off‐site fabrication currently play in the construction of resources operations? What are the benefits and opportunities of using off‐site fabrication? No comment 5. What are the positive and negative impacts of resources projects on the demand for labour and skills in other industries, and how can these be addressed? Response: The resource sector places inflationary pressure on wages in labour source communities (both local and FIFO) and can lead to skill and labour shortages, especially in smaller communities. The social pressures are exacerbated by key local staff being recruited into resource sector jobs, such as police officers, teachers and even plant operators with the local council. The first way to address this is through the Strategic Labour Force Plan articulating the proportion of local labour to be sourced. This provides government with an opportunity to gauge if this is realistic within the available infrastructure and human capital of the region and through negotiation perhaps could be adjusted, or additional infrastructure funded by the company to manage the social impacts. Secondly, if key local staff were provided with an opportunity to share the fruits of the resource boom in a part time way, it might make their existing jobs more sustainable. I am reminded of a north west Queensland company that established a ‘mum’s shift’ from 9am to 3pm Monday to Friday to respond to the local labour market conditions. If resource companies could in partnership with government offer key local staff part time work it would aid retention of staff for both employers and reduce the social impact. For example, local police officers could perhaps do one weekly shift per month on the mine, with the balance on normal police duties. The state government benefits from retaining (and attracting) police in the region, the mine has an additional workers and the officer benefits from increased wages. Finally, in Part 1 I referred to focussing the recruitment of the unemployed to backfill positions as being more efficient than trying to recruitment them directly into the resource sector. This model has worked well, particularly for local councils, including for indigenous job seekers. Increasing the supply of labour 6. What are the opportunities for increased workforce participation by women in the resources sector? What strategies could be used to get more women to work on resource operations? FOR COMPANIES: What works now and what more could be done?
- 6. Response: I refer to my response to Question 5, regarding a north west Queensland company that established a ‘mum’s shift’ from 9am to 3pm Monday to Friday to respond to the local labour market conditions. Where there is a need smart firms will respond innovatively. Government can assist by promoting good and innovative practices across the industry, in partnership with industry bodies. 7. What do you consider are the opportunities for increased workforce participation by older workers in the resources sector? FOR COMPANIES: What works now and what more could be done? No comment. 8. What do you consider are the opportunities for increased workforce participation by the underemployed in the resources sector? FOR COMPANIES: What works now and what more could be done? No comment. 9. What do you consider are the opportunities for increased Indigenous workforce participation? FOR COMPANIES: What is the current level of Indigenous participation in your workforce? What is your target or goal in relation to Indigenous workforce participation, including your arrangements with contractors? What, if anything, needs to change to achieve your goal for Indigenous workforce participation? What strategies have worked well? Response: Critical mass is the key to effectively engaging Indigenous people into resource sector jobs, both on the work site and within the community. Too few Indigenous people on the worksite and those that are there are fish out of water. Get sufficient critical mass, such as at Century Mine, then Indigenous faces are just part of the background and it is the norm. Similarly, in welfare dependant Indigenous communities, a handful of people with well paid jobs are the exception and subject to intense pressure from family and the community at large and often leave jobs as a result. If a sufficient critical mass is employed in the resource sector, be it locally or FIFO, then that becomes the norm and pressure is put on those not working to engage. Unfortunately the high levels of poor literacy and substance abuse in remote communities is at odds with the resource sector recruitment requirements and significant greater investment in preparatory support is generally required to get Indigenous people ready for resource sector work. In many cases these are young people with perhaps the equivalent of grade eight education but grade three literacy such that a six week course is not sufficient to prepare them for work. 10. What role can fly‐in fly‐out (FIFO) play in addressing unemployment in regions with high numbers of job seekers while meeting the resources sector’s needs? Response: As detailed in Question 33 below and in Part 1, the government can work with industry to identify and support labour supply hubs in areas of higher unemployment, particularly some of the Priority Employment Areas previously identified by the Commonwealth Government, such as Bundaberg/Hervey Bay, Southern Wide Bay/Burnett and Cairns. The Wide Bay Burnett in particular
- 7. is well placed to become a FIFO labour supply hub for the Surat Basin and Lower Bowen Basin (and further afield. Given that the Wide Bay Burnett encompasses two of the Commonwealth Government’s twenty Priority Employment Regions, there is sufficient labour supply to meet the needs of the resource sector across Queensland. Local Councils are proactive with economic development and engagement of industry. There is also a strong engineering base (dating back to 1868 in Maryborough) supported by the Australian Industry Engineering and Manufacturing Network, a regional industry body. 11. What strategies can be used to encourage unemployed Australians, including those who lost their jobs during the global recession and disadvantaged job seekers, to get jobs in the resources sector? How can Job Services Australia providers best service the needs of the resources sector? Response: As detailed in part 1, preparing and supporting unemployed job seekers directly into the resources sector is very inefficient, requiring significant preparatory support and with higher wastage rates. A more efficient strategy is to place unemployed job seekers into replacement vacancies created by the movement of currently employed job seekers into the resources sector. 12. What can be done to encourage and increase interstate/intrastate labour mobility, including for apprentices? Do you have any ideas for increasing intra/interstate migration? FOR COMPANIES: What do you think has worked or not worked to encourage people to move to take up job opportunities on resources operations? Are there any structural and institutional rigidities that impede mobility? Response: Given the high salaries paid by the resource sector I don’t see mobility as an issue. Motivated job seekers are either moving themselves and their family or undertaking significant commutes (by road or plane) to connect to resource sector jobs. The biggest impediment has been the availability of affordable housing, especially in towns adjacent to resource operations. In some instances, such as Moranbah, it is not just the lack of affordable housing, but the lack of housing at all, and any price, which has resulted in caravan parks overflowing and people sleeping in their cars. Again I refer back to the concept of a Strategic Labour Force Plan that articulates the proportion of labour to be sourced locally and the local council allowing developments to accommodate that local labour force (or negotiating a different arrangement). Additionally, diversifying the number of FIFO hubs across the country will encourage people to move to those locations where the hubs are. 13. What role should immigration play in meeting the skilled labour needs of the resources sector? How can the resources sector’s needs be balanced with other regional and national skills needs? Response: A Strategic Labour Force Plan that articulates if foreign skilled labour is to be sourced will assist the transparent assessment of the request to ensure that Australian labour sources were actively considered prior to seeking overseas labour. However, I should note that skilled migration is likely to play an active part is some key skill areas where sufficient labour supply isn’t available. 14. What are the advantages and disadvantages of the predominance of short term contracting in the construction and some operational aspects of resources projects? What other models might assist in improving labour supply? No comment. Educating and training to supply the right skills
- 8. 15. How can we fully understand the future skills requirements of the resources sector and best allow the market to match skills requirements to available work opportunities? Response: I refer to Question 2, I recommend that the peak bodies, Industry Skills Council and Mining Industry Skills Centre take a more proactive role in facilitating the simple communication of the sector’s requirements to the labour market. 16. How responsive is the education and training system to the resources sector’s skills requirements? How could responsiveness be improved? How effectively are the resources sector’s skills requirements conveyed to the education and training sector? Response: As noted in Part 1, there is a high degree of confusion amongst RTOs regarding the specific skill/training requirements for the resources sector. There is general awareness of requirements for professional and trade qualifications, although these are largely provided by Universities and TAFEs but these sectors are perceived to be slow to respond to industry need. In practice, some TAFEs and Universities are better than others, particularly those with good linkages with industry. The resource sector and TAFE and Universities should be encouraged to form additional strategic alliances to foster a more response education sector for professional and trade qualifications. The main issue with non‐trade qualification appears to be communications. Private sector RTOs are generally responsive, but as levels of understanding vary the training delivery may not be hitting the mark. Industry groups should play a leadership role in clearly articulating to the training sector the requirements for specific training and entry requirements, such as generic inductions, machinery tickets, etc. 17. What reforms would make the apprenticeship and wider skills formation system more sustainable for the resources sector and less vulnerable to shifts in economic demand? How can apprenticeship completion rates be improved? Response: The Group Training model has made a significant contribution to stabilising the shifts in labour demand for apprentices and should be further supported. 18. What are the appropriate models of trade training which could be utilised in the resources sector? What are the alternative models of trade training that might be trialled in the resources sector? Response: An often heard complaint from engineering trades in Townsville and Mackay was that the mines would poach their apprentices just as they started to pay their own way, in third or fourth year. Whether the ‘poaching’ was by resource companies or their contractors is not known, nor to the degree it occurred (State Training Authorities could easily do some analysis on change of employers for certain engineering trades to assess this issue), but it acted as a deterrent for ‘town’ employers to engage apprentices. Given that State Government’s have responsibility for administering the apprenticeship system, I recommend that assessment of this issue occurs and , if there is a need, consideration be given to mechanisms that mitigate the impact. For example, the gaining employer (the resource company) could be required to ‘buy out’ the training contract from the losing employer, compensating them for the time spent training the apprentice. This could be done within the existing cost envelope; rather than offering a third year apprentice a salary of $80,000, offer them $60,000 and the losing employer $20,000. Additionally, Group Training is a strong model that has underpinned trade training across all industries for many years. Given that first year apprenticeships are few on mine sites, resource companies could invest in Group Training off site for the first two years, perhaps with some mine site placements to expose the apprentices to the worksite, before taking the apprentice on site in the third year. Again, similar to the above example, this could be cost neutral with the current
- 9. third/fourth year apprenticeship wage amortised over the three/four years of the apprenticeship. It would also provide an opportunity for both the apprentice and employer to ‘try before you buy’ with short term work placements in the first two years to gauge whether the apprentice has the right aptitude for mine site work. 19. How can the resources sector contribute to the identification and development of skills for sustainability in preparing for its future skills needs? No comment 20. How does the use of FIFO impact on apprenticeships, training and skills development? FOR COMPANIES: How do you provide training for a FIFO workforce? No comment 21. What more could be done to increase the number of school leavers employed in the industry, including under Australian Apprenticeship arrangements? Refer to q 18 22. How can the resources sector make the best use of the accredited and non‐accredited (qualifications versus skills) training system (including Australian Apprenticeships) to prepare for its future skills needs? No comment 23. What more can be done to recognise the skills that resources sector employees acquire ‘on the job’ and through unaccredited training? Response: The Queensland Government’s Skilling Solutions Queensland is a good model that could be applied to the resource sector in Queensland and nationally. 24. Under the new demand driven system of funding universities, how can we ensure an adequate number of higher education graduates in disciplines that are relevant to the resources sector? Refer to q 16 25. What else needs to be done to encourage people to pursue careers in the resources sector, both in the construction and operational areas? To what extent can it be promoted as a pathway to careers in other sectors? Response: The resource sector is well known to young people for paying high salaries and as such will attract a certain cohort. The key barriers appear to be geography (if you are near a mine or a FIFO hub you are much more likely to engage in that sector) and awareness of how to enter the industry. Again, this goes diversification of FIFO hubs and to communication with RTOs and others about what the industry requirements are. 26. How can the resources sector upskill its workforce to prepare for its future skills needs? What can be done to improve on‐site skills development? Response: I have found the resource sector to be at times innovative and at the forefront with upskilling its workers, while at other times it can either be in a penny pinching mindset or conversely seem to just ‘throw money’ at a problem. One issue is the stability of the workforce. Any employer
- 10. with an high turnover of staff is reluctant to invest in staff development for the next employer to take advantage of. Mechanisms that promote stability of the labour force will promote on‐site skills development. 27. What are the barriers to young people’s participation in courses that are relevant to the resources sector, including in vocational education and training (VET) and higher education? What are some potential strategies to increase participation? No comment. 28. What arrangements create an appropriate balance between government and resources sector (including contractors) funding contributions to education and training? Who should meet the costs of equipment, systems and resources required for training purposes and what other support may be needed for trainers and assessors (noting that training facilities for advanced process operations may require specific expensive facilities)? No comment. 29. Are Australian Government incentives creating the best outcomes for Australia’s skills needs? If not, what suggestions do you have? Which state and territory government incentives work? Which do not? Response: For the resource sector the incentives don’t appear to have much impact. When compared to generous apprentice salaries, $12,000 for user choice training and perhaps $4,400 in Commonwealth Apprentice Incentives (which incidentally has only increased by $400 in the past twenty years to adjust for the introduction of the GST) do not make much of a dent on a $70,000/year apprentice salary. However, the pinch is felt in the small engineering firms that train apprentices in the major towns and cities, only to lose them in third or fourth year (or perhaps as they complete) for a higher paying job in the mines (q 18 response details). At this point I will recall a former Commonwealth Education Minister’s comment (Dr Nelson), that an apprenticeship was as valuable as a university qualification. Unfortunately the level of government investment in apprenticeships doesn’t match the comparison, with university places funded at three to four times the amount of apprenticeships places. Considering that trades people in the resource sector will earn comparable salaries to tertiary qualified people, and pay similar tax, some strong consideration needs to be given to reforming the apprenticeship system to encourage greater take up and less reliance on foreign workers. 30. What measures could be put in place to facilitate the interaction between industry and training providers, such as industry seconding staff to mentor and train trainers in practical industry requirements? What additional infrastructure is required to meet future training requirements? No comment. Other issues 31. How should FIFO operations be balanced with local community development interests? What do you consider to be the respective roles of governments (Australian, state and local) and industry in the development of local communities, particularly in the provision of social infrastructure and services?