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Standing Committee on Regional Australia
Fly-in fly-out work practices
House of Reps
- Parl No.
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Standing Committee on Regional Australia
CHAIR (Mr Windsor)
Haase, Barry, MP
Tehan, Dan, MP
McCormack, Michael, MP
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Standing Committee on Regional Australia
(House of Reps-Thursday, 29 March 2012)
CHAIR (Mr Windsor)
- Mr HAASE
Content WindowStanding Committee on Regional Australia - 29/03/2012 - Fly-in fly-out work practices
FORD, Ms Janet Elizabeth, Jan Ford Real Estate
Committee met at 13:00
CHAIR ( Mr Windsor ): I declare open this public hearing of the House of Representatives Standing Committee on Regional Australia as part of its inquiry into the use of fly-in fly-out—better known as FIFO—workforce practices in regional Australia. This inquiry was referred by the Minister for Regional Australia, Regional Development and Local Government, the Hon. Simon Crean MP. The committee has received over 170 submissions, which are available on the committee's website. The committee will call witnesses to the table as per the program. Before introducing the witnesses, I will refer members of the media who may be present at this hearing for the need to fairly and accurately report the proceedings of the committee—I am sure they will not be any trouble in Port Hedland. As part of this hearing, the committee will be conducting what we call an open-mike session at the end of the proceedings. Before getting on with the formal part of the proceedings, I ask the member for Durack, Barry Haase, to say a few words.
Mr HAASE: Thank you, Chair. Good afternoon, ladies and gentlemen. I welcome you, as I welcome my colleagues to the town of Port Hedland. I thank my colleagues for their keen interest in joining this particular information gathering session. They are going back to the Eastern States, I can assure you, much wiser—much better experienced and understanding of your circumstances here in Port Hedland. To you, the locals, thank you for your interest. For those that have made submissions, thank you for that. During this following session we are going to glean a great deal of information that will go a long way towards formulating our report, which we hope will be noted by government rather than become a collector of dust or a door stop. The quality of our report and its recommendations is greatly dependent upon the nature of your evidence. It is important that you attend and I thank you for that.
CHAIR: Thank you, Barry, and thank you for the guided tour that we have had whether in the air or on the ground. We have learnt a lot. Most of us have not had a lot of experience in this part of the world. It has been an extraordinary experience, not only to deal with this issue but also to look at the massive expansion of the mining sector in this part of the world.
This is the Standing Committee on Regional Australia, and, for those in the gallery, the parliament has not had a committee on regional Australia before. I believe we have a very good committee in terms of the balance. All of the members are from regional Australia, so there is an inbuilt affinity with a lot of the issues. Our first inquiry was into the Murray-Darling system on the East Coast. This is our second inquiry and we believe it is of significance right across Australia. Obviously, Western Australia has been impacted to a degree, both in a positive and negative sense depending on who you are talking to, for a longer period than the other states. Queensland is not far behind and parts of New South Wales are also voicing concerns or want the potential impacts on existing communities, and on remote areas generally, explained in a better way. So we do take this topic very seriously.
The committee does not have a preset, determined agenda. Our job is to take on board what people tell us and then try to convert that into recommendations and, where possible, put those positions to the floor of the House. Having a committee made up of government and non-government members and reaching a consensus, as we did in the Murray-Darling inquiry—and I am sure we will in this one as well—adds a lot of value and weight to the recommendations which, hopefully, we will come up with.
I now welcome a representative of Jan Ford Real Estate to today's hearing. 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. We have received information from you and we thank you for that. Do you wish to present any additional information or make an introductory statement?
Ms Ford : Yes, I do wish to add some further information. I have brought you all a photographic booklet of Port Hedland, which shows some lovely scenic photographs of Port Hedland. I would ask you to turn to the front page. On the inside cover is the ocean behind you, out there from this building the council chambers. That ocean is our biggest asset. It allows us to take all the iron ore across to China. Without it, I do not think we would be sitting here. On the other side of the page is a small building and on the top corner is a big development that we now have council approval for—it could be a FIFO camp or something that creates longevity in the town. I also have a globe of the world and a book that I believe is in the Parliamentary Library. It was written in 2009. I am not sure if you are familiar with it, but I would hope you are. It is called the Jewels in the Australian crown. It is written by Dalton D'Sylva. He is an economist who has been searching this area for quite some time and makes lots of factual and statistical points about Australia, its future and its past. I would like to just start with the end of his book, which says, 'The region can see Australia's great wealth and jealously eye Australia.' The region he is discussing, the so-called Golden Triangle—and no, it is not about opium, but that is where China started. It is the Golden Triangle here, the Pilbara, across to India and across here that takes in China. It is that area of ocean. If you turn and look out the window you will see that is the ocean that carries our minerals across to that Asian area. So I will just repeat: 'The region can see Australia's great wealth and jealously eye Australia.' Australia needs to protect itself more by growing itself—not by taking in less people but more, not by being small minded but having a bigger vision of itself. Australia will be less vulnerable as it grows. Australia needs wise leadership to strengthen and grow the wealth it has, because the best is yet to come.
I would like to thank you all very much for coming here to Port Hedland. I note that you, Kirstin, you come from Central Queensland. You will probably be familiar with everything you have heard on this trip. I have also heard it in Queensland, where I once lived. I have spoken to councils, to CEOs and I have travelled the world these last five years, trying to get answers and trying to understand why my town here in Port Hedland has had 5,000 houses for the last 50 years when I know that BHP has a 50-year plan, from 2012 to 2062. FMG have a 50-year plan, from 2012 to 2062. Hancock Mining have a 100-year plan, from 2012 to 2112. Atlas Mining has a 50-year plan. I sit on the port authority as a board member. I have been there for almost three years and I challenge my colleagues around that board table: please have a 50-year plan. They tell me it is not their job, they tell me they cannot have a 50-year plan, because they do not know what is going to happen. I ask you today: do we have a 50-year plan for any of our government agencies or our country, because this region that I talk about, this golden triangle, has 500-year plans.
Five years ago I was lucky enough to attend a conference in Chiang Rai, which is north of Shanghai, in Thailand, a regional area. I went to the museum of the Golden Triangle and an exhibition on the history of opium. I learnt about opium as the trader for the Chinese economy, but it did not suit the English and the Americans. My history is not that good, but what I did see was a 500-year plan, from 1491 for the next 50 years. I came back to Port Hedland and I ran for council, because I knew we did not have a vision for this council. Since 1974, I worked very closely with this council and this town because my grandparents were born in the little town you drove through this morning. My grandmother came from Cossack. You probably did not turn off and go that way, but I guarantee you drove through Roebourne. What a sad sorry state that town is today, but please remember it is a 100 times better than it was 10 years ago. Nowhere as vibrant and as happy and as prosperous as it was 100 years ago— and why, because we are approving all this mining. We are doing that as a country because we need the wealth and I understand Australia is a business, it needs income in and it needs to spend money. If I was running my household like that I would need to know that I do not spend more on my larder than I do than the housekeeping I would receive. So we are getting all the royalties, sure, we are getting all this export money but do we really have a plan for a long term budget. For where the extra income will come after all this construction boom goes. Because these FIFO camps are built for construction, could they not be built for long term. Could we not have 50 year towns at our airport, could we not have 50 year camps in our town centres. These sorts of buildings that are 100 years old, we have to take BHP kicking and screaming and squealing every step of the way to get any sort of contribution to our community. Can we not just nick off, can you pay Jan Ford out, can you get her to leave town so we can just go and stick 6,000 people at the airport. We have six thousand houses in town. Last election we probably had 6,000 electors three years ago. My guess from doing my calculations on real estate sales every week we will have 4,000 electors when we go to elections next March and yet our Mayer who has been so absolutely wonderful at championing this cause our population growth, tells me, we have 24,000 people in town and in five years there are figures showing 45,000. I know they are not permanent residents and they could be. So out of that, I wave my wand! Ask any questions. While you are thinking, there are 60 cities in this Golden Triangle with more than one million people in each city. How many of those do we have in Australia?
Mr TEHAN: Thank you for your very entertaining presentation. It has definitely been the most colourful that we have had and it is especially good when it comes immediately after lunch. As a real estate agent, have you found what has happened in the town beneficial to your business?
Ms Ford : To my bank account, yes. To my own wealth creation, yes. To my clients' wealth creation, yes. To people's temperament when they go to bed at night, no. I have family on both sides of the blanket in Port Hedland. They are English boat people, a Lockyer family, and I have the original Australian people. Eleven years ago I used to sell houses to locals, because we had had a massive growth called an HBI plant construction for BHP. Under the State Agreement Act they were forced to do a complete secondary processing plant. With a quote of $875 million that plant was finished for $2.75 billion three years later. Housing went from $50,000 to $180,000.
I came to town to live when I could finally get a house in 1998. Over the next five months one house was sold. The prices went back to about $70,000. I jumped in and grabbed every local Australian I could find who had a job. I managed to get them $500 and a Keystart loan and I sold houses like you would not believe, because the English Australians would not buy them—they did not trust or believe in Port Hedland. The bottom had fallen out of the market. One of those girls I drove in a car today and she told me that her house is now worth $700,000. That is the beautiful part of what has happened in the last 12 years.
Mr TEHAN: What is the process of getting land released so that more houses can be built here?
Ms Ford : As in slow! Maybe a story is best. I think they always work because you remember the entertaining side of life. When I first came to town and worked as a real estate agent, I had lunch with Ross Holt who is the CEO of LandCorp. In this state since the 1980s the state Land Act allowed LandCorp to be created to develop land in the areas where it was not viable for the private developer. So LandCorp was born.
Ross Holt worked for that department for a long time. I first met him in February 1999. I had lunch with him just over in that other room and I asked him to please release land so that I could keep selling houses and build the north so that we could have the population of 60,000 that I was promised at primary school in 1966, the year the moratorium was lifted for exporting iron ore and the year that decimal currency was introduced to Australia.
He told me that we did not need any more land here, that there was plenty of land around. I knew he was right, because I had seen it—and you have seen it. We fly over it and we drive over it. I know this land. My grandparents told me there was lots of land. He did not lie. He told me that he could not release any land because there was no demand. I challenged him and said that I had a list of people. I had been working in this town for a month but I had followed this town since 1974 and I knew there was demand.
A year later we met again for lunch. I asked him the same question and I said. 'I have brought my list of demand, proving that people want to buy land here.' He said to me that they are not sales. I said, 'No, they are not, because I had three blocks for sale last year and I have sold them. I cannot sell these other 150 people a block of land because I do not have any land to sell them.' He said, 'You cannot prove demand unless you have settled sales.' I said, 'I cannot prove demand if you do not give me the land to settle.'
We had this conversation for another three years. In 2002 Stedman Ellis came from BHP and announced the Outer Harbour. We have known about Outer Harbour in the public forum since 2002. I asked him publicly where people would live. He said that they would rent on the open market. I reminded him that I am a real estate agent and I had just come from work, where I paid a receptionist in those days $30,000 to answer the phone and tell people, 'Sorry, there are no houses in Port Hedland available to rent.' I mentioned that to our dear friend Ross Holt again, but I forgot his name is Holt. I kept expecting that we would have a freedom of land here, because I kept seeing it. I had been taught in 1966, but also 1962 by my grandfather, that we would have a million people here in the north by the time I was a parent. I am now a grandparent.
The story ends in October last year, when I attended an economic forum seated next to Ross Holt. He looked at some information that I had given to the Pilbara Development Commission that had been presented by another party. He looked at the price of housing that went from $50,000 and $70,000 to $750,000. Houses that were $120,000 that are now $1.5 million. He turned around and he said, 'Jan, I should have listened to you.' I said, 'Ross, please tell me,' and I wish it was recorded, 'had you listened to me in 2002—forget '99—what would you have done differently?' Ladies and gentlemen, he said to me, 'I would have bought land.'
So, Dan, your question: what faith do I have in the process of land release? I watch our mayor tirelessly campaign and lobby and turn herself inside out. I have known her personally for over 10 years. I have never seen anyone lobby as hard to get the land release. As she is working so tirelessly and so hard, BHP knew for 10 years they had an outer harbour. We have a growth plan. We have all these plans. We are the most over surveyed, under serviced place in the world. And what happens? After the EPA approvals, BHP suddenly wants 6,000 people at the airport. Why 12 years later do we suddenly need 6,000 people for BHP, when for 10 years the public forum knew that outer harbour was going to be built? I do not understand.
Mr McCORMACK: You mentioned in your submission that the median house price was $867,000. What do you get for that?
Ms Ford : Depends where you buy. If you go out onto the rural estate, which is about 20 kilometres from town, you would get a block of land and a shed. If you come into Port Hedland, and I guess you came through South Hedland—
Mr HAASE: I think we should clarify the situation for you, Jan. We did the dreadful thing and flew in today. We have not done this road.
Ms Ford : You have not done a tour?
Mr HAASE: We have not. We have toured around town. We flew in, so we did not come through Karratha.
Ms Ford : Thank you. Did not come through Roebourne?
Mr HAASE: No.
Ms Ford : That is sad.
Mr HAASE: I know it is, but time is of the essence.
Ms Ford : I understand. For $867,000, I do not think we have anything left in the port—the old part of our town. But if we cross over the bridge to the new satellite city—if you look at the map behind you, you can see the round circle. That was designed in the late sixties and construction started in the seventies. We went from 300 houses to 5,000 houses in a five- to 10-year period. That area was designed for 60,000 houses. The average brand new, four-bedroom house of about 160 square metres is $1.2 million. It rents for $2,500 a week. A little old fibro that was built for a 40-year life in 1970 would sell for around about $750,000 to $850,000. They rent for about $1,500 a week. But we also have a demand for workers now that we have never, ever seen before. My prediction is that those prices will double in the next 18 months. There is a solution. It is simple. All these camps we are building; just make them permanent. Let people built them in the town centres. Make them with bigger, stronger walls so that the sections in the middle can just be taken down at the end of five years. Bring the construction people in. Let them build our cities. Let them build cities of a million people in the north so we have 60 cities of a million people. We need people here, to be strong. We need school teachers. We need schools, we need shops. I am a fly-in fly-out real estate agent and I have to fly to Perth to buy a top, because we have Kmart. Every now and then we have a boutique. A boutique might stay open for a year or two years, depending on how high the rents get. If we can put 10 people into a shop and convert it to residential, the rent triples, but if we keep it as commercial for a small shop, sorry, it is too expensive. We buy our shoes at Kmart. We buy our skincare online. We are fly-in fly-out, drive-in drive-out people and we have been since time began. It is not the fly-in fly-out that is the problem; it is not having a plan.
We are a one-customer, one-industry, one-product country. In the North here we are selling iron ore. Karratha has gas—they have got two industries. But it is still mining companies and it is still China buying. We are hearing that India and Africa will buy. But I have been to those areas. They will not buy like China has bought, because they are not planning to work with Australia the way China is. We can be the best customer for China if we can actually be the best customer to ourselves. We can build cities so that we can fly-in fly-out from Singapore to Singapore.
We have got the international airport. Once a week or twice a week we go to Bali, which is two hours away. It is two hours to Perth. We have just got a direct flight through to Brisbane. We bring people from that east coast around the Maroochy area, the Sunshine Coast, where people do not have work. We bring them across here so that they can work. Let them live in a construction camp in the town centre and then, once they have been able to get on their feet, let them buy a house so that they can bring their families. Have the camp so nice in the town centre so that they interact with people, without segregation. We go out to the camp at the airport and my daughter and my grandchildren say, 'This is great! Wow! Look at all the fresh food. The shops are open. There is a restaurant.' But we are only allowed to go there because when I sat on this council we fought and fought and fought to allow the local people to go into that camp facility.
But we cannot go to the tennis court. We can go down to our rec club here and go on the broken, old bitumised tennis court. Or we can go downtown and look for a restaurant that is open after 7 o'clock at night—and we struggle. So I think that what we are asking for is interaction with government and industry. If we approve a $50 billion project, let us know that $25 billion will be labour and how many people we will need to put to bed at night. Let us do our sums. Let us embrace planning and let us make it a great word not a naughty word or a dirty word, and let market forces take force. We have seen the result of that.
Mr HAASE: Jan, would you like to make a comment about the taxation zone rebate—
Ms Ford : Thank you, Barry—a great conversation. In my submission I have already given you the information. Back in the 1960s the land around the outskirts of Perth and also around Broome and regional areas was offered to developers on conditional purchase, to cater for all the immigrants. There was no price for the rural land but the developers would have to put in all the infrastructure—and, Tony, you are nodding, you are probably familiar with all of this. If that was done within a timeframe, people could take freehold and they could set up businesses and all sorts of development.
In return for that, they would get massive tax zone rebates. An electrician would come up here to work because they might get the same wages in Perth but when they went back at the end of the year they would get 95 per cent of their tax back. I left Perth in 1974 to come to Port Hedland—I was with telecommunications with the Australian government—but I could not get accommodation here in Port Hedland. There was enough for one person and there were three of us—three jobs, but only one room. It has not changed.
So I went to Darwin where I stayed in a Commonwealth hostel, commonly known as a fly-in fly-out camp today. It looked exactly the same when I went out there, but the quality is a little bit better because, as a council, we forced an upgrade. When I worked in Darwin, 80 per cent of my take-home pay covered my food and lodgings and my rent, but when I went back to Perth, I got 95 per cent of my tax back. So the benefit was enormous. Later I asked the accountant why that happens He said that it was because we are trying to populate the North. A tax rebate—it was that simple. Sometimes we think it is too simple to work. In the 80s we had tax inhibitors—fringe benefits tax, capital gains tax, payroll tax. All these taxes are so huge in the north that it has now become so much cheaper for someone to put a fly-in fly-out worker up here. We need people like me to sit on council and say, 'Build a decent camp,' so that people do not get killed in the cyclone and so that we do not need memorials, like the one near the hotel at the airport that you would have driven by, to remind us that lives are precious. If we could actually build camps that were maybe $50,000 or $100,000 per person rather than $20,000 per person, they would stay around forever. And we could use those. People could get tax incentives to actually start their businesses at the end of construction and have businesses that support all the mining industry. We could have universities that may encourage people to come across and learn the culture of Australia, so we do not have people dying because they did not understand the safety regulations or could not read properly. We could also look at all sorts of innovation in different industries such as food production—we have water here, we have land, and we have empty boats coming across.
CHAIR: In relation to the fly-in fly-out issue, have you seen any information in this region in relation to the proposed policy changes? You have just been talking about it, with the fringe benefits tax and zonal allowance. The anecdotal information we are getting is that the current incentives and government policies are actually encouraging fly-in fly-out and that it is cheaper for the companies to participate in that work arrangement than to look at residential. But we have not seen any firm evidence that says that. Are you aware of any evidence? We are going to get the tax office to talk to the committee about the policy arrangements and what they actually mean, but have you seen any evidence? The second part of the question is whether you know the point at which the balance changes, where it would be more profitable for companies to have residential workforces, or a majority thereof—in this part of the world I do not think you will ever get to a circumstance where everybody lives here because of the construction phase of some of the operations. Have you seen any evidence at all or would you be interested in trying to get some for us?
Ms Ford : I have been trying for a long time, but I gather stories. FMG are one of the only companies who have actually put a price on a fly-in fly-out worker. They tell me it is $74,000 a year, which includes accommodation plus airfares. That is straight-off expense. They did put that to me in an email and I would be happy to forward that on. They tell me that if they had to buy a house and house a worker, it would cost them—at that time, which was a year and half ago—$1 million to achieve a standard that would be acceptable for a worker. That would have to come off the balance sheet because they would have to buy the house. We had a taxation talk last night about all the problems of housing people up here. If they were asked the right questions, the tax department would give you the right answers, but the challenge is knowing the questions to ask. I have been doing that for the last 20 years.
CHAIR: Would you like to assist us, if you would not mind.
Ms Ford : I would love to.
CHAIR: What are the questions that you would ask, in terms of your experience in relation to those issues? We will ask those questions.
Ms Ford : What I would like to look at is how much tax is generated from this region over a 10-year period. I would then look at how much tax will be generated from this area in a 10-year period when the construction has finished, because it will be 10 per cent of the taxes we are getting now. I would then look at what sort of taxes we could generate if we were clever enough to offer a tax-free window, not right at this moment, but for new businesses that are not to do with mining but that do support the industry. I would then do the calculation of the taxes that could be if we had 10 different types of industries with a tax window, and would then show what the tax would be when that came back to Australia. The concern I have is that we have the mining industry putting money into Australia's economy and we have services taking money out, but I cannot see something in 10 years time that is going to bring money into Australia's economy. Sometimes it is a case of saying we might look at the nitty-gritty of what it costs to do a FIFO worker. The Department of Minerals and Energy has been promoting fly-in fly-out workers for 10 years because the tax system suits them. But that is not their driver—their driver is that it is easy, it is simple, it is easier to control. And, if we go more into the area of social conscience, a fly-in fly-out worker will fly in and be sent straight to the campsite; they will not know if any of those companies are breaching their environmental conditions; they will not know if that company is contributing to the social amenity of a town; they will not know if a child is on a waiting list for two years to get into kindergarten and is knocked back, when they are a sixth-generation local child; and they will not know that the community have been under the surveillance of a dust inquiry for the last 10 years, to see if dust is in fact a health issue. If they are a fly-in fly-out worker, they will not be aware of any of those things. We could spend a lot of time investigating the taxation as we have it, but that is more in the detail and short term; it is not giving us a vision that gives us a 50-year plan for the future.
CHAIR: I do not disagree with you personally, but this inquiry is about what the Commonwealth government can do in relation to the circumstances.
Ms Ford : Forgo the taxes for 10 years for new businesses up here that generate Australia at the end of 10 years, let us build on our own land and stop having Ross Holt halting our land and being paid such a lovely salary and telling me he wished he had bought land for his own pocket. I would like to see those things happen—one is Commonwealth, one is state. But what I am saying is that it is other states as well. That land should not be controlled from 2,000 kilometres away. It is like England first settling Australia, trying to control the way Australians worked from England—and that was in the days of ships, when I think it took 2,000 convicts on a ship some six months to get here. The free settlers were 120 to a ship, and it took them five months. It is a long distance. Now it is only by plane, but you still cannot do it from those long distances. I am happy to work with you with any taxation or fly-in fly-out matters.
CHAIR: Thank you, Jan. We will have to wrap it up there now. A copy of the Hansard will be sent to you. If there are any issues with what you have said and they have reported, please let us know—I don't think there will be. If you could also follow up on a couple of those things too. If there are members of the gallery who are a little bit interested in some of the economics of this, we would appreciate any of that information. But thank you very much for coming along.
Ms Ford : Can I please just ask that you look in your Parliamentary Library for this book.
CHAIR: Jewels in the Australian Crown?
Ms Ford : Yes, thank you. And thanks very much for your time. I can mark the 10 years. I have calendars, which you can all have as well. So in 10 years time we will see if we have made an impression.