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Standing Committee on Regional Australia
30/05/2012
Fly-in fly-out work practices

D'ALMEIDA, Mr Murray Howard, Chairman, Connecting Southern Gold Coast Ltd

HARDMAN, Mr Sean, Director, Resource Connect

NORTON-KNIGHT, Ms Anne, Advocacy Officer, Gold Coast City Council

Committee met at 10:23

CHAIR ( Mr Windsor ): Welcome. There are a few formalities that I have to go through, if you would not mind. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. These proceedings are being broadcast and televised on the internet. Thank you very much for your attendance. I do apologise for the delay; that is just the way our system works.

We would like you to make a brief statement. Then the committee would like to ask you some questions in relation to your submission.

Ms Norton-Knight : Thank you very much. Thank you all for the opportunity for us all to attend this hearing. We are very grateful for the opportunity to come along and have a chat with you. We thought we would give you a very quick snapshot about Gold Coast City to put it in perspective. Most people view the city as a bit of a tourism town; however, we are Australia's sixth-largest city, with a current population of about half a million. The population is expected to grow to about 735,000 by 2026. We have an economy of approximately $18.2 billion. As you are aware, it is an economy that is very reliant on the construction and tourism industries. The impact of the GFC on our local economy has been fairly devastating. The composition of those two industries in the structure of our economy make up about 40 per cent.

We have some concerning city indicators along with that overreliance on those two sectors. While we have had population growth, it is slowing a little bit compared to what it has been over the past four or five years. The unemployment rate for the Gold Coast in April 2012 was about 6.4 per cent, Queensland six per cent and Australia 5.5 per cent. We also had an increase in the length of unemployment for those people who are unemployed. As I said, we have a very narrow economic base, and the high Australian dollar has impacted on our tourism and capacity to attract international tourists into the city.

Building activity in the city is incredibly weak. We have weak demand for the construction sector. That is partly exacerbated by the fall over of the second-level mortgage lenders and partly exacerbated by the changing lending value ratios at the banks within the city and a bit of a lack of confidence.

For the purposes of the hearing today, we see a huge opportunity in the fly-in fly-out market. We view that from a number of perspectives. One is the opportunity with an excess supply of labour, particularly due to the downturn in the tourism and construction sectors. But it is not only unemployment; it is underemployment. So we have a lot of skilled workers who are currently unemployed at the moment and heading north, south and west, wherever they can get jobs. We also see the potential for retraining a number of workers, particularly from the construction sector and perhaps even from the marine industry as well. We see longer-term benefits for our young people in terms of getting into apprenticeships, traineeships and tertiary qualifications focusing on science, technology, engineering and mathematics areas.

That is a bit of a snapshot. We do not see the mining sector to be the panacea to the ills of the city, but we certainly see it as a large economic opportunity that we are keen to embrace. The city is open for business, and we are looking at a number of opportunities to explore.

CHAIR: Okay. Questions?

Mr GIBBONS: One of the problems that this committee has identified is that, whilst there are plenty of people who would appear to be qualified by being unemployed or underemployed and possibly wanting to pursue a job in the mining industry, they do not actually have the qualifications. To work in the mining sector these days, it is almost like a trade: there are substantial hurdles to overcome, not the least of which is being away from families and all of that. The only way they are going to have a real chance should they choose that is if they are able to get the qualifications. Is that a possibility in your region? Do your TAFE facilities have mining courses? Are there private providers of vocational training like mining courses, machinery operating courses et cetera?

Ms Norton-Knight : I will make a very quick statement to that and then pass to Murray. One of the things that we identified when we started working collaboratively with mentors on the southern Gold Coast was pulling together a whole raft of businesses to try to see how we could get this progressing in the city. We certainly identified the educational needs as being a critical factor and have had a number of roundtables with the universities, the RTOs and TAFE. I will pass to Murray to explain the relationship with TAFE.

Mr d'Almeida : Yes. It is a very important point you have raised. I talk about this with my hat on as Chairman of Connecting Southern Gold Coast, which is a group specifically set up by the Gold Coast City Council to promote economic development in the southern end of the coast. I should say that extends right into northern New South Wales. Official unemployment is eight per cent. We believe privately it could be closer to 11 per cent. There is a disconnect between the opportunity and the capacity—exactly as you have said—to supply that. The state government arranged a jobs seminar on the coast. Ten thousand people attended that. Six got jobs.

Ms Norton-Knight : That is anecdotal evidence.

Mr GIBBONS: Ten thousand attended—

Mr d'Almeida : a jobs expo.

Ms Norton-Knight : It was one day.

Mr d'Almeida : What was clear was the disconnect between all the willing participants—government, industry, employment, education. We the council have set out to try to bridge that gap, and at our end of the coast we have Southern Cross University. They have now established a strategic alliance with the local TAFE to provide a pathway for unskilled, semiskilled, unemployed, underemployed and even the skilled to migrate through that. This is where Resources Connect have put together a solution—not a service—for the mining companies to enable them to bridge that gap. They have stepped into this obvious gap between the opportunity and the resource—without demeaning the people and their skills as a resource.

There is also a raft of private training operating with the state government and with the council, stepping into that space in the whole area. Connecting Southern Gold Coast had a budget committee meeting yesterday with the council for our allocation for this year, and the new mayor of the coast even offered the heavy equipment facilities of the council to be used to facilitate the training required. So it is a very pertinent point that is being addressed. Fortunately, the Gold Coast City Council now understand the dynamics of putting people on to address this, and we are very grateful. I am very pleased to hear of it.

CHAIR: How are the companies reacting to this? One of the things we are picking up is this disconnect. In some cases the companies are very proactive, and in other cases they are leaving it to employment agencies et cetera to try to pick people up out of various communities. Are they right in?

Mr d'Almeida : Very much so. I think Sean can speak to that. He has recently spoken to a group who have identified there are a dozen service requirements between those two disparate interests. I know that his company has identified that.

Mr Hardman : Yes. I suppose there is the question from the mining and energy companies' perspective. From that perspective we have been more at the coalface, trying to understand their issues, what they are facing at the moment and their key triggers. To name a few, there are staffing, sourcing, training and staff retention. That retention seems to be a big issue for them at the moment. It is a real concern for them. They realise that, with the pipeline of opportunities coming through at the moment, when it falls to their time to start recruiting and physically getting the people, it is going to be highly dependent upon the multiple locations they need to attract from. Not only are they going to be from Cairns and all the way through to the Gold Coast, the topical issue is overseas issues workers as well. It is all being put in the melting pot at the moment. We are looking at it from more of a holistic, turnkey solution and addressing their logical issues of fly-in fly-out and accommodation in mine site areas as well.

CHAIR: So it is more your initiative than theirs.

Mr Hardman : We are trying to understand how we can package turnkey solutions and then integrate that into a location like the Gold Coast, where we have been working with the city council and the various departments down there to see what the opportunities are and how you bring them together. We understand that there is the large disconnect that you mentioned with the jobs expo and 10,000 willing participants. People are keen to find a path into the industry; how do we get them to make that connection with the mining and energy companies and get a firm commitment? At the moment it is one thing knowing that it exists; it is another thing actually committing a client to investing in that region.

Ms LIVERMORE: My question was pretty much the same. You are obviously putting a lot of effort into bringing all the pieces together at your end.

Mr d'Almeida : Yes, very much so.

Ms LIVERMORE: Is it correct to say, as the chair said, that mining companies are not yet coming knocking on your door?

Mr Hardman : From our perspective, Corporate Development Mentors is more of a property based company. We have worked over the last 18 months in I guess a subsidiary company to us which we launched just recently, which is called Resource Connect. Our core role, where we have been in the last 18 months, has more been in the master planning, property development and accommodation solutions in and around some mining locations and regional towns. We have been working with the Roma council on a project out in Roma. That includes affordable housing solutions to what they are faced with due to the mining and energy companies, such as high rents in town and not being able to attract, for instance, the school teacher or the council worker and grow the town because accommodation is not available. We have been working through solutions like that. We have also been focusing in and around the Galilee Basin, working with a few mining proponents and looking at how the town can expand with the anticipated growth of that region. We are doing it in a structured format, working with the councils, making sure that they are on board, and then trying to solve expansion issues with the mining companies as well.

Ms LIVERMORE: So you are right where these problems are emerging and getting an understanding of what the problems are, then—

Mr Hardman : Relaying it.

Ms LIVERMORE: working with the people at the Gold Coast to see what solutions can be put together at the Gold Coast end.

Mr d'Almeida : An end-to-end solution rather than just a specific solution.

Mr Hardman : To simplify, we look at it as a point A location where the worker lives and a point B where the work is, for instance, the mine site locations. But what we have learned through the process is that each location has its own individual challenges, so no one size fits all. You cannot compare Moranbah to what Alpha is going to be faced with; there are completely different planning issues there. We are just trying to understand a lot of that and then communicate, as you said, back to where we think we can assist a process.

Ms Norton-Knight : Just in addition to that, the other thing that council have done is a labour analysis. From a simplistic perspective, we were thinking if we could identify the supply side and then look at the demand side and match them up we would have a bit of a solution. We have encountered a number of difficulties with that. No. 1 is that we probably went a little bit too early, so we are now waiting for the census data to come out this year. The first tranche of that comes out in June through to November. But the other difficulty has also being identification of skills within the city, particularly for those people who are unemployed. As an example, on the Gold Coast we have 50 electricians, of which 10 per cent have five years experience. But that information is not collated anymore, so it is really difficult to find out what the skill base of the city is, particularly for unemployed people. It is really hard, and that causes a problem in itself.

Mr MITCHELL: One of the issues that we have heard about is that it drags the skills out of local communities—the mechanics and, as you mentioned, electricians. With you setting up as a hub, is that also going to cause issues for local businesses? Some of the stories we have heard have just been outrageous—McDonald's burger flippers earning big money and things like that. Is that a concern for you, that your good tradesmen and workers then move out to other areas, which then drives the prices up for local businesses who have to employ someone else at a greater rate if there is a skills shortage in the mines?

Mr d'Almeida : There are two aspects to it. One is that they obviously take existing skilled people out of the community. In some instances that has had a negative effect. We are working very closely with the Southern Cross University, which has joined up with TAFE. The positive side of this is it is creating apprenticeships and opportunities for kids to move into those areas that have not existed before. There is a silver lining to this that we did not expect, understand or know existed so it is a bit of push and pull. It is pulling people into the area. It is also pulling people who were previously unskilled through courses that are available and into entry-level trades like motor mechanic. Mature individuals previously just would not get a head start. There is a bit of both.

Mr MITCHELL: But you have got that lag in time. An apprenticeship is four years but in the meantime how do you work manage? For example, a diesel mechanic might be earning $75,000 at Gold Coast diesels and then the mines come in and want to pay 2½ times that. Have you do manage that in the short-term? When local businesses are not able to pay that sort of money you have the issue then of a short-term skill shortage. The cost of supplying that labour as a service to the community goes up a lot higher because of the people getting dragged out to the mines.

Ms Norton-Knight : I think that is a really good point. What impact is this going to have, say, on other industries is one thing we have considered, particularly within the economic development branch of council, which is where I work.

There is another issue in the city. We have very high unemployment. Perhaps idealistically we would be thinking if there was that extraction of people out of the city then that gives people who are unemployed or underemployed the opportunity skill up. I think that is where we are trying to have a proactive stance and are working with the RTOs. We have applied for a fly-in fly-out coordinator as an expansion of the federal program that was piloted in Cairns to address some of those issues. We are also looking at a business supply analysis. We are trying to identify through that the significant issues within the city and also identifying where the opportunities are for local businesses to supply goods and services to the mining sector as well, which would then create a whole raft of additional jobs.

It is a very good point that you make but our point is that we have very high unemployment. People have a choice where they go for employment and we would hope that if skilled people do leave the city then that gives additional opportunity for the unemployed to get jobs locally.

Mr d'Almeida : To date, on the southern end, it has not had a noticeable effect because there is unfortunately quite a large and growing pool of unemployed, including skilled people, sadly.

Mr MITCHELL: Do you have a lot of intergenerational unemployment in the area, second and third generation?

Mr d'Almeida : No, I do not think so. The biggest issue is probably youth unemployment, which has been traditionally soaked up by the hospitality industry, which is a high-level employer of semiskilled and unskilled labour.

Ms Norton-Knight : I would not be able to answer that definitively. Intuitively you might think so given it is a bit of a haven for surfing.

Mr HAASE: The nature of the terminal that you referred to in your submission, in practical terms, how would you see that applying? Is it for the use of employees or is it for the use of family left behind? We have had evidence from Western Australia that a local council is talking about building such a facility within their local government area for the families of FIFO workers. What is the nature of yours?

Mr d'Almeida : The concept was really born around the question of how do you create a mining and energy hub or precinct at the Gold Coast, which has great airport infrastructure? Would having drug and alcohol testing at the facility on site for energy companies be attractive if they wanted to get a more efficient process? You could look at developing a medical centre associated with it. To get an employee mine site ready there are a number of inductions, medicals and training courses employees have to adhere to before they can work on site. It was about how we create a hub at the airport to then allow that to attract them. It is more like an attraction program to the mining energy companies who say, 'We're investing in this. If we invest in this side of it, we invest in the Gold Coast region.'

Mr HAASE: What has the reaction of industry been?

Mr Hardman : Really positive, very positive. They thought the idea of having a separate fly-in fly-out terminal with the associated supply chains right on the airport precinct was very good. The big question was, which I think everyone is still trying to identify, that is great but can you guarantee the work areas. We can have the right qualified worker coming from the Gold Coast region or coming from the surrounding region to the Gold Coast, and that is the point that we are trying to identify with answering that question at the moment. That is our major concern in saying, 'Love the concept, but do we know our workers are going to be qualified to tick all the boxes from the skill levels that they require?'

Mr HAASE: If I may, Chair. Could you make a generalisation as to the major area of disconnect? In recent times there has been some criticism. I am, of course, always espousing, 'Go west, young man. Apply, there are plenty of jobs.' I have critics who say, yes, but all of these people inquiring of companies about the availability of jobs are being turned away and not responded to et cetera, et cetera. Could you generalise and reference a point that is the cause of disconnect?

Mr Hardman : From what we saw from the Jobs Expo that came to the coast and the 10,000 people that were eager to get into that market, I think we have identified that there is no industry pathway, so to speak, and to then state that we want to enter and have to tick A, B, C, D and E and get different levels of induction courses and training courses under your belt. There is not that sort of pathway, and then to say that once you have qualified to that there is a job here at the other side. That is the point we are trying to identify.

Mr HAASE: So, you are saying it is the ancillary certificates, not the trade certificates nor the experience. Mark Star is a qualification that we have in the goldfields in Western Australia which refers to occupational health and safety. It is not about trade skills, it is not about drugs and alcohol, it is about simply having been in the industry and being able to prove that you are competent in that environment.

Mr d'Almeida : There is a raft of issues, but I think Ms Livermore identified it before. There is a coordination role to pull a whole group of disparate issues together into this matrix.

Mr HAASE: So, there is no one particular facet.

Mr d'Almeida : No. This is where the Gold Coast has been very proactive to try and identify and to pull these metrics together. It is like a jigsaw, you get the corners in, then you have to fill it in.

Mr TEHAN: Going back to your point before about having the right qualified worker. I am wondering, from a federal government perspective, do you have the training facilities on the Gold Coast to get those right qualified workers?

Ms Norton-Knight : That is an excellent question. One of the biggest questions is access to either a mining site or to a quarry. I think every RTO playing in the mining space at the moment is trying to get their hands on a quarry in the Gold Coast. So, we have a number of those that are being looked at. I think there are about three or four quarries that are available for training at the moment. That is probably the biggest one. We have been working with the RTOs. The other side to that is from a council perspective you need to be very careful, as you would appreciate, about the alignment with a particular RTO over another. We have to be seen to be very equal in the way that we deal with each of those companies. There is significant training happening in the city and with the roundtables that we have already had with education providers. We have included schools, RTOs and TAFE, and the universities have been really positive. Everybody is really keen to get going. The disconnect is maybe about absolutely understanding (a) what the needs are for the mining sector and (b) being able to marry that up with what you need, what you have, and where do those two points join.

Mr d'Almeida : In that there is a role for government—federal, state, local—and private enterprise. It comes back to that point.

Mr TEHAN: Just following up on that, I imagine traditionally a lot of your trades training has been around the hospitality sector.

Ms Norton-Knight : Construction and hospitality.

Mr TEHAN: It is whether the flexibility is there and whether government has understood the circumstances of the Gold Coast and what has happened, especially with hospitality and construction, to be able to say, 'We need to move the focus about how our RTOs are operating. Where are the new opportunities?' Is that happening?

Ms Norton-Knight : That is an excellent point that you raise. I do not believe that government does understand the Gold Coast particularly well. We are seen as a tourist strip. When you think that the high-rise environment only accounts for 15 per cent of the built environment of the city, it puts into perspective that there is a lot more depth in the city than just tourism. Of those two sectors, construction and tourism, if you put tourism to one side we believe the construction sector has a lot of capacity, particularly in the construction phase of the new mines, for transference of skills. I do not think it has been fully fleshed out in the federal arena.

Mr CROOK: Have you any idea of the current employment drain from the Gold Coast into the mining sector? Frequently, for argument's sake, bearing in mind I come from the West, we see it wholesale, particularly not even in the gold fields, which is a mining community, but right through the wheat belt. Young farmers leave, young tradesmen leave; they have got a ticket, they get all the other ancillary tickets and go to the mines. Have you got any idea of the drain currently out of the Gold Coast?

Ms Norton-Knight : It is certainly one thing that we have been trying to define. Coupled with that is, in having the potential for a designated hub at the Gold Coast, you have to establish demand before the airline companies will even consider it. That has probably been one of the biggest things we have been trying to define. How do you work out how many people are leaving the city to fly out of Brisbane? How many people are driving? We have not been able to do that. We have come up with a couple of innovative ideas that we have not yet gone through with, but that is a big issue for us. I know from the public service sector that we have 2,500 people leave the city to go to Brisbane for work but I do not know from a mining sector perspective. It is something that we are pursuing.

ACTING CHAIR ( Mr Gibbons ): I am interested in the expo that you held which 10,000 people attended. Were there representatives of the mining companies there to explain the situation with jobs in the mining sector?

Ms Norton-Knight : We did not hold the expo. It was held by the state government in, I think, November last year. Personally, I think there was a little bit of a misunderstanding on both sides. The 10,000 people who attended were thinking that if they wore their fluoro jacket they would go in and get a job.

ACTING CHAIR: That is the point I was about to make. I can understand people who are unemployed looking at the practicality of a high-paying job in the mining sector. Traditionally, these have not been skilled jobs. When you go through the history of mining it was virtually a labourer's job. It is certainly far from that these days. It is all very well to say that fly-in, fly-out could well be the answer, especially if there is a major airport where you do not need a long drive to be able to fly in and fly out. There is also a substantial downside to fly-in, fly-out work practices—the impact on small communities; the impact on lifestyle for those who have to participate in it. Do you know if that was part of the seminar? If it was not, it should have been.

Ms Norton-Knight : It is not my understanding that that was part of the seminar. As an aside to what you were saying, that is one thing that council has recognised—the impact on families that are left behind with fly-in, fly-out partners. The council has provided in-principle support for a community liaison person, and their role will be specifically to work with fly-in, fly-out families to make sure that they are connected in the community.

ACTING CHAIR: Are there any other questions?

Mr d'Almeida : If there is time, I would like to raise one more point. While canvassing the employment issue, which is fundamental to the Gold Coast and it goes without saying the benefits we would accrue, I would like to speak briefly, and put another hat on—it is a little bit to the left field—as the board member of a resource company listed in London, mining coal in Mozambique but also with interests in Australia. I was in London last week for capital raising involving that company in Mozambique which is mining and exporting coal. The topic of the discussion with the funders and people ancillary to them was of great concern to me. I also sit on the board of an Australian company called Hyperion Asset Management that manages $3 billion in industry superfunds. We have closed those funds. The research by that superfund manager and through Standard Bank in London found that mining and resource development will continue for another 10 years minimum—that is what the Reserve Bank has said. And it is sustained development. Booms are quite often mismanaged. Boom applies to the prices that are being obtained, with coal being up to $100 a tonne. What everybody is in agreement on is that those prices are going to come back to the market, which is the world. Every mineral known to man is in Africa and Indonesia. Indonesia recently exceeded—

CHAIR: What is the point in relation to this inquiry?

Mr d'Almeida : My point is that Australia needs to remain competitive. We see FIFO as being a way of Australia remaining competitive in the resources sector. Governments and companies are going to have problems with infrastructure capital cost, such as with governments providing hospitals, schools, other medical facilities et cetera and companies having to come to the party. Olympic Dam is now under question because of the CapEx. We see FIFO not as an end per se but as a means to an end. It can mitigate the CapEx, particularly for governments and local councils. Sean would tell you that the councils that he is dealing with are broke. They cannot afford to put in the infrastructure that the states say are their problems. When it comes to remaining competitive in the resources sector in the next 10 years, the issues that are going to go to the core of that are the capital costs and whether it is viable. That is what you need to know when you knock on the door of banks and funders. That hybrid arrangement of FIFO where you can use the infrastructure in areas like the Gold Coast or Cairns are wherever is going to play an ever-increasing part in the sustainability and the competitiveness of Australia in a world market.

ACTING CHAIR ( Mr Gibbons ): This committee is well aware of that. We have taken substantial evidence along those lines right throughout our travels. We have travelled extensively and we are just about finished.

Mr MITCHELL: The former Victorian government had a growth area infrastructure contribution for large community housing developments. If you wanted to do a new housing development, when the land was converted into developable land they put a charge on that to fund infrastructure costs. Small communities and councils run on the smell of an oil rag. Do you think that that is something that could be considered? When you are going to suddenly bring 3,000 people in to a town of 800 people then, rather than the cost falling directly on the local government, should there be some contribution made for the infrastructure that is needed?

Mr d'Almeida : I totally agree that there should be. But at the end of the day our competition is in South America, Africa and South-East Asia. They are all closer to our markets. That is the balance. Everybody has to pay and contribute, and I have no argument with that concept. It is just going to be a balance. If it does not add up in the bottom right hand corner, capital is mobile and it is just going to move around the world, sadly. So the answer is yes, but what is the balance? There should be a contribution, but we need to get that balance right. Otherwise, it just will not happen.

ACTING CHAIR: Thanks very much for that. Thanks for your submission and for your time. Hansard and Broadcasting are recording these proceedings, so if you need to check that for accuracy, by all means do so.