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Joint Standing Committee on Foreign Affairs, Defence and Trade
06/07/2017
Australia’s trade and investment relationship with the United Kingdom

HUGHES, Mr David, Managing Director, Crown Project Services

[12:08]

CHAIR: Thank you very much for appearing before us at our Sydney hearing. We are just hoping you have got something to add to our discussion around the UK-Australia trade and investment relationship post-Brexit. Do you have an opening statement?

Mr Hughes : CPS is a medium-sized project management company really based in Sydney but operating on the eastern seaboard. The opportunity to just present our rather narrow view on the free trade of human resources is our focus. It was really when I had the opportunity to understand that the subcommittee, or standing committee, was asking our view on the trade of human resourcesthat is the way I took itbetween England and Australia that I observed that from 2012 to about 2015 half our business was based on skilled British engineers, architects and resources working for our firm. They had come out of England after their downturn, through 457that was the principal class of visaand we were able to comply as a 457-sponsored employer and pick up these skilled people. One such example was we responded to a tender by the ACT department of justice for a skilled negotiator for a PPP. They had been on that journey for a while for some new law courts that you will see under construction on London Circuit. We, as a Sydney-based firm, put in a proposalwe had to transfer a 457 sponsorship from health infrastructure to usto the ACT government. His unique skills got us the gig and has got the ACT government a fine PPP project under way.

Since that time, we do not comply with the 457-sponsored employer stringent requirements. It is all to do with training. Our business is exactly the same. But as it has grown we have to have two per cent of evidenced training expense against our business going back to when we were first a sponsored employer. We see these restrictions as making it harder and harder for us in the construction and property boom that is happening on the eastern seaboard. We are struggling to grow our business.

Any positive aspect of trade and training between skilled resources in the UKand I guess I am talking about senior resources that come to Australiawould be a great benefit to us in our industry; and conversely, presumably, the young graduate getting an opportunity to work in the UK, where I am hearing it is becoming more restricted and more difficult. That would be equally advantageous.

It is really the opportunity to put my observation. We do not have anywhere near the number of Brits working in our firm now. We are struggling to get quality resources and CVs crossing our desk. Anyone that is good in the market is fully employed. For us to complyand we have been working on a $100 million tender this morning for schools on the north coast of New South Walesour pool of skilled people is very, very shallow. Anything that can be done to get that free-flow that I certainly witnessed four or five years ago happening again would be of benefit to Australia.

CHAIR: Thank you, Mr Hughes, for your evidence. Mr Perrett.

Mr PERRETT: Thank you, Chair. Mr Hughes, your company has been around 14 years. Why look overseas for expertise when we have got Australian universities and educational establishments? Why have you not gone to them, especially with your extensive links with government, as indicated by your projects over the years?

Mr Hughes : There are two answers to that question. We are recruiting both interns and graduates, and recent graduates. As you would expect, they are new and green and inexperienced. In our submissions to government, especially on the tenders like I was talking about, they are expecting 20, 15 and 10-year experienced operatives to take on those roles. They are very contested so, therefore, the price is keen.

Mr PERRETT : Can you not retain people? If you have been doing stuff for 14 years, are you not able to train up people and retain them?

Mr Hughes : Absolutely. But we try to grow our business and take on more work. Back to the British contingentand I did try and put an embargo on employing another Pom or Irish manthey have retired. They were senior; they have retired. In the case of our Canberra experience, because the project got to a certain stage they made him an offer to become an employee so he could act as the government's representative on that project. So we lost that person. There is an ebb and flow of people into and out of our industry. The average tenure of my staff is about nine years, which we think is excellent, but we have had a tranche of new ones come this year.

There is an ebb and flow all the time, but we want to grow the business, and we are actively recruiting out there from the Australian pool. As I said, it is very shallow. We have people wanting to come across from Perth with no existing network, because Perth has really slowed down in the property sector. That is a big liability for us. We will take the punt if we have the work. My observation is that we get really skilled people from the UK, and I am talking middle-aged with family, and the usual obligations that come with thatbedding them down, finding suitable accommodation and managing that. But they come with unique skills, an understanding of the English language and an understanding of contract law, which enables us to put these people into submissions and get well and easily accepted by our clients, reviewing our submissions. If we had all juniors, we would fail to get past that space.

Mr PERRETT: So Perth is an opportunity, and mostly they speak English over there, don't they? Contract law is similar to that on the east coast; that is my understanding.

Mr Hughes : Absolutely. But the depth of skill is quite narrow. It might be the universities, and that is fine. In the case of the particular chap for Canberra, he had been involved in PPPs in the UK, in the health and the justice sector, which we just do not do in Australia. We do not go down to $10 million projects. We like $200 million to a billion dollar PPPs. Hence this skill in debt and equity financing, construction language and contract procurement was

Mr PERRETT: A special skill.

Mr Hughes : It is invaluable and it is not available elsewhere.

CHAIR: Dr McVeigh.

Dr McVEIGH: Thank you for your evidences, Mr Hughes. With the skills shortage and the current challenge, as you explained it to us, is it something that will abate over time? Regardless of anything else, your juniors and so forth are getting trained up.

Mr Hughes : Correct.

Dr McVEIGH: You have the challenge of growing your business, as you have described it to us, but over time those skills will develop?

Mr Hughes : Yes.

Dr McVEIGH: There is just a gap at the moment, is there?

Mr Hughes : Yes. I am seeing that there is a strong forward workload in the eastern states, be it road, rail, property expansion or residential work. Some of it is cookie cutter; some of it is very specialist. I would suggest that the rail infrastructure projects are extremely specialist. To a certain extent we have been excluded out of those. But the boom that I am seeing may well go on for five to 10 years, by which time there may well be an agricultural construction boom or, more importantly, a mining boom, and the cycle will continue. With respect to anything that I might be able to say that encourages a focus on any negotiation with Britain as a result of Brexit that restricts that free trade of the movement of labour, I would strongly encourage we maintain that or accelerate that free trade of labour.

Dr McVEIGH: I cannot expect to ask you to speak on behalf of the industry or your competitors, but would you argue that this is felt across the industry?

Mr Hughes : I would. One of the constraints that I have is that I do not have a British parent as a counterparty to an Australian-based professional services firm. That would be ideal. They are stepping into Australia and we may well get absorbed, but they still have the same constraints of visa requirements to be able to transfer those skills easily into Australia, exactly as we are feeling. I think it is common across the board, because they are looking at the same pool of CVs as we are.

Dr McVEIGH: Should I consider from your evidence that these are very specific British skills, or can they be sourced from the US or other Western, English-speaking countries?

Mr Hughes : The answer is yes they can. The British do slip more easily into the Australian psyche, way of life et cetera. I have had a couple of Indian fellows, well experienced in India, working for international firms, but they come with a different skillset and viewpoint, and it makes it that much more difficult. Certainly, those are crossing my desk, but very few British, I guess that is my other observation, at this time.

CHAIR: Do you have a view on negotiating an EU agreement prior to a UK agreement?

Mr Hughes : I do not.

CHAIR: That is fine. I think we have covered that really well. What about mutual recognition? We have heard a lot about issues around mutual recognition, the Washington agreement on engineers, lawyers, accountants and actuaries. Do you have any issues with the mutual recognition aspect? Are there things we could improve if we are going to have specific chapters and clauses which relate to this transferability of skillsets in people?

Mr Hughes : In the case of anyone from the United Kingdom, I think there is complete mutual recognition of skills and qualifications, whether they are quantity surveyors, architects or engineers. It is a standard that is extremely high and comparable with Australia.

CHAIR: Is that the same for EUsomebody with a French qualification, for instance, or somebody from Germany or Italy?

Mr Hughes : We subjectively would not know the quality of that institution; similarly with the United States and similarly with Asia.

CHAIR: But with UK, you unequivocally recognise the qualifications?

Mr Hughes : Yes, and especially if they are a member of a recognised institution; absolutely.

CHAIR: I am sorry; I cut you off. Keep going.

Mr Hughes : I think we are going down the same track. Whether it is a quantity surveyor with RICS, an engineer or an architect, if they have been able to get membership of those institutions, they are highly respected in Australia, recognised instantly and unquestionable. When we get the quality of the resource, they are as good as they purport to be.

CHAIR: Thank you, Mr Hughes.

Mr Hughes : Thank you for your time.

CHAIR: Thank you for your evidence; we appreciate it.