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Economics References Committee
01/04/2016
Future of Australia's steel industry

BRADBERY, Councillor Gordon, Lord Mayor, Wollongong City Council

BURDICK, Ms Rebecca Ann, Policy Manager, Illawarra Business Chamber

MURPHY, Ms Debra, Chief Executive Officer, Illawarra Business Chamber

[15:40]

ACTING CHAIR: I now welcome our hosts, the Wollongong City Council, and more particularly the head boss, the Lord Mayor, Mr Bradbury, and the Illawarra Business Chamber. First and foremost, Your Worship, thank you very much for being such a wonderful host of the committee here today. It is very nice. You have set a benchmark for the afternoon tea. I must report that back to the secretariat.

Senator KIM CARR: We are on record in Hansard.

Councillor Bradbery : If that is the case, then we are a class act in Wollongong.

ACTING CHAIR: You are. You have lodged submission No. 20 and submission No. 5 respectively with the committee. Would any of you like to make any additions or amendments to those submissions?

Councillor Bradbery : No.

Ms Murphy : No.

ACTING CHAIR: I invite you to make an opening statement, Your Worship, if you choose to do so.

Councillor Bradbery : First of all, thanks for coming to this part of the world. After all, Wollongong is the place where the majority of raw steel production is taking place in this country. The Illawarra region has a proud and strong history in manufacturing, and the steel works at Port Kembla have been assembled at Wollongong, with many residents moving into the region specifically to work at the steelworks over many decades, especially after the Second World War. Manufacturing remains the most important sector in the output of the region. It contributes about $7.9 billion annually in revenue to the region's gross regional product. The manufacturing sector is the second largest industry in terms of employment, after health and social services, employing about 8,570-odd people, equating to about 12 per cent of Wollongong's workforce.

Wollongong is well known for its strong manufacturing base and its skilled workforce. In the seventies and eighties, the steelworks employed more than 20,000 workers; however, since the early eighties, the workforce has undergone a series of structural adjustments and continued to reduce in size. Today the workforce is about 80 per cent smaller than it was at its peak. Council is very pleased with BlueScope's decision to continue raw steel production at Port Kembla, and that decision was made last year. I was very pleased to see all the stakeholders work together to get the best outcome possible for our local economy and to keep BlueScope operating at Port Kembla.

While it is acknowledged that the 500 job losses associated with this decision will have an impact on the local economy, it is important that BlueScope remains sustainable in the long run and is able to compete globally on the world stage. Our REMPLAN modelling that we have undertaken indicates that these job losses will have an economic impact of around $402 million on the local economy, so it is something that we should not overlook. The local economy has weathered a number of downturns from reductions in the size of the BlueScope workforce since the 1980s. These downturns have made us more resilient and we have all pulled together to ensure that Wollongong remains a vibrant and sustainable city. If I could just add a remark there: it is more than just the city; it is the impact on the region of the Illawarra.

Whilst manufacturing remains an important part of the local economy today, Wollongong is a city in transformation. The Wollongong economy is currently undergoing a transformation to diversify and strengthen its economy from one based around traditional manufacturing to one more focused on services. This can be seen through the growth Wollongong has experienced in recent years in the health, education, knowledge and services sectors, as you have heard from the University of Wollongong. These sectors represent significant opportunity for the local economy, both now and into the future, and for new technologies and industries to emerge.

There are also a number of exciting things happening in the local economy. For example, the port has undergone a significant transformation with a $170 million inner harbour upgrade. The $700 million redevelopment to the expanded capacity of the outer harbour is underway as well. The city centre, for instance, has recently experienced about $1 billion in investment over the last 12 months and with the West Dapto land release we anticipate around 50,000 residents moving into that space. It is one of the largest land releases outside Sydney.

There is a significant opportunity for Wollongong's economy to grow now and into the future. That is not to detract from the significance of steel. Wollongong has a sophisticated and well-developed innovation ecosystem that supports industry collaboration and excellence, as we just heard from the University of Wollongong. Key elements include a world-class university, an award-winning technology precinct and a purpose-built business accelerator as well.

Much of this transformation was led by what we call Advantage Wollongong. This is a significant partnership between the New South Wales Department of Industry, the University of Wollongong and the Wollongong City Council. As part of the council's submission to this committee I add my support to the four recommendations contained in the Illawarra Business Chamber's submission. Today I would like to add my support to these recommendations again. They are: requiring government suppliers to conform to quality standards for steel; enhancing local content procurement through better engagement and reporting and publicising the employment, skills and technology outcomes of public infrastructure projects; encouraging the state and territory governments to use steel participation agreements, and supporting economic diversification by building entrepreneurship, boosting small business research and investing in infrastructure. I realise you have probably heard a lot about procurement and applying standards to prevent dumping and those sorts of things but at the same time I still believe that we have an opportunity in this space to contribute much to the Australian economy. I will leave that to be further elaborated on in the context of your questions.

I want to add a personal touch. This is something I think that needs to be highlighted. In our city, and probably in Whyalla and other locations around Australia at the present time, as a person who has come from a background in social sciences and more specifically as a minister in the Uniting Church and a chaplain to various emergency services I witness with what we are going through at the present time two things: grief, loss and change in our communities and a lack of leadership. If we are going to talk about the future of the steel industry in this country, we also require leadership—leadership in terms of its direction and understanding of where we are going. If we are going to lose jobs and confront great change, we also need leadership from above in terms of direction and the future of our country and, more specifically, those who are going to be dislocated and lose their positions or opportunity to find happiness and a sustainable future need some direction and help in that process. When things like this come out of the blue it is a tragedy. As the lord mayor of the city I am more concerned about social capital and the protection of the wellbeing, health and happiness of the people of this city and region. I will leave it at that.

Ms Murphy : The Illawarra Business Chamber is the voice of business in the Illawarra region. We support 1,300 unique businesses across the five local government areas of Wollongong, Kiama, Shellharbour, Wingecarribee and the Shoalhaven. Many of our members are either directly or indirectly involved in the steel supply chain in the Illawarra. We are a regional division of the New South Wales Business Chamber, which is the state's peak business representing nearly 20,000 members. Our policy and advocacy agenda is informed by the New South Wales Business Chamber's thought leadership and our submission is based on their manufacturing agenda.

Manufacturing provides a substantial multiplier across general economic activity through its intertwining links with other sectors of the economy such as construction. These economic links are far greater than any other industry sector by a factor of at least two or, as was discussed earlier, through the BIS Shrapnel report a factor of 2.3. What is good for manufacturing is good for our economy, but, conversely, if manufacturing sneezes, the rest of our economy gets a cold. Steel remains the backbone of the Illawarra and is a vital contributor to the economy and our nation as a whole. Many of us who live in this region have at one time or another worked in the steel industry, including myself. I worked there in the days when there were over 20,000 people. It is part of our community fabric. We know that steel generates jobs, skills and investment. As we have heard, BlueScope invests heavily in skills and innovation, which are key platforms for growth. Not only has BlueScope benefited from this investment but many of the businesses in the supply chain have also benefited from the flow-on into their businesses from those investments.

We have a depth of engineering skills and innovation, which I personally believe is unsurpassed in Australia. As Senator Carr pointed out yesterday, and I believe also this morning, high-skill, high-wage manufacturing jobs are a big part of the Illawarra's future, and we wholeheartedly agree with that. Yet steel in Australia has undergone a significant decline. Market factors such as high input costs, price volatility and anticompetitive policies by foreign governments have had a negative impact on the competitiveness of our domestic steel industry.

In our submission we recommended three strategies which we believe will stem this decline and secure the future of steel in the Illawarra and, importantly, also its supply chain. Firstly, we strongly believe that government suppliers should be required to meet Australian standards for steel. Secondly, we are asking the inquiry to enhance local content procurement for government projects. We are seeking better engagement with local suppliers, as well as transparency and reporting on employment, skills and technology outcomes of public infrastructure projects. Thirdly, we recommend the federal government work with the state governments to use industry participation agreements so that domestically produced steel is used in major public infrastructure projects. Beyond these specific measures to secure the future of steel, we are also calling on the federal government to take action to help the Illawarra's economy diversify. It is clear that we are an economy in transition and also that steel will remain a vital part of our regional economy. As the lord mayor pointed out, manufacturing represents close to $8 billion in annual revenue to the economy. Just to put it in some perspective, that is about 43 per cent of the gross regional product of our region as a whole. That is a significant chunk in terms of the gross regional product, which is $18.6 billion.

In September 2015 we partnered with Ai Group and gave the federal minister for industry and innovation a comprehensive structural adjustment 12-point plan to diversify our economy. It provided strategies to build entrepreneurship, boost small business innovation and diversification, unlock employment-generating lands and invest in the skills and capacity in the region. We ask the inquiry to urge the federal government to adopt this structural adjustment plan which will assist the Illawarra to generate new jobs and create our own growth and a sustainable economic future. We welcome the opportunity to answer any questions of the committee, particularly if you would like to have some more insight into the potential impacts on our members and the supply chain.

ACTING CHAIR: Thank you very much, Ms Murphy. I am going to make you emperor for the day and you will be the federal government that you referred to in your presentation, where action is required by the federal government. Your first announcement would be what?

Ms Murphy : Simply to have a level playing field. I think that you have asked that question many times, but it is an unfair situation that we find ourselves in within the global environment in which we compete. It really just needs to be a level playing field for the steel industry to compete.

ACTING CHAIR: So are you talking about tariffs or are you talking about subsidies for Australian steel mills? How do we get to a level playing field?

Senator XENOPHON: No one has mentioned the 'T' word.

Ms Murphy : Tariffs?

ACTING CHAIR: No. It is okay to talk about level playing field. How do you achieve a level playing field?

Ms Burdick : We publicly stated, earlier today actually, that we believe all of those practices that you mention are anti-competitive. We would not support tariffs; we would not support any measures that would artificially prop up the industry here. That includes mandatory targets for local content sourcing. What we are advocating for are the three strategies that Debra outlined a moment ago: (1) industry participation agreements; (2) measures to enhance opportunities for local suppliers to participate in public projects; (3) conforming with Australian standards. I think there was a lot of discussion earlier today about the different standards that apply to imported steel. I think 43 per cent of imported steel does not conform with our standards. We think that would create a level playing field for our domestic suppliers.

Senator KIM CARR: So you are saying that you do not support procurement measures other than industry capability proposals, industry participation. What do you support in regard to procurement?

Ms Murphy : In terms of procurement, the local content strategy is aimed at making a fair for lower tier suppliers to get a slice of the pie.

Senator KIM CARR: So that is industry advocates—

Ms Murphy : Yes.

Senator KIM CARR: the industry capability networks—those types of measures?

Ms Murphy : Through the Industry Capability Network, yes, absolutely.

Senator KIM CARR: But what about the proposition where Australian government should, as a matter of principle, buy Australian?

Ms Murphy : We do not support that, do we?

Ms Burdick : No.

Senator LAMBIE: Why not?

Ms Burdick : We do not support a mandated approach.

Ms Murphy : So we support in principle—

Senator KIM CARR: What if I found another word for you? Would you then support the idea that Australian governments actually buy Australian?

Ms Murphy : Well, that, in principle, is local content in our eyes.

Ms Burdick : We would say that using the ICN and creating industry participation agreements will have that effect anyway. It will bolster participation by local suppliers. It will have that impact.

Ms Murphy : That, coupled with Australian standards—which I think is one of the biggest problems—we actually let cheap and substandard-quality products in.

Senator KIM CARR: All of those things you mentioned were part of the Buy Australian at Home and Abroad program—all of them. What has happened to those, in your opinion?

Senator LAMBIE: How is that going?

Ms Burdick : They are not being used by the governments of the state and territories. For example, the New South Wales government has just made—

Senator KIM CARR: But they are still, by law, in place.

Ms Murphy : Is it a law or is it a standard?

Senator KIM CARR: No, within the Australian Jobs Act there is a requirement for governments to undertake these measures, but they have taken all of the people out of those sections of the department.

Ms Murphy : So they are not being enforced then.

Senator KIM CARR: That is exactly right.

Ms Murphy : So, if they are not being enforced, then how are they a law?

Senator KIM CARR: Well, they are the law. There are many laws that are not enforced. This is one of them. My point is: does the chamber support the enforcement of those laws?

Ms Burdick : Yes, we do.

Senator KIM CARR: Can I turn then to some other areas that you have mentioned. There were other programs that were administered in terms of the Enterprise Connect—the advisers. I presume you were a business partner in those?

Ms Murphy : Yes, we actually had three Enterprise Connect advisers in the region. Sadly, all three were taken away from the region. Given that we are going through some downsizing, as the lord mayor mentioned, and some changes in our economy, it is a tragedy that the government is not supporting the brokering of innovation with small businesses on the ground through that very beneficial program.

Senator KIM CARR: So why were they withdrawn?

Ms Murphy : It is my understanding that in the re-contracting the government made a decision. I do not know what that decision was founded on, but all I can tell you is that we ended up with no advisers located in this particular region. There is one department representative who notionally covers that off.

Senator KIM CARR: You have also called for a small business innovation research program or an SBIR program. How do you reckon that would work in regard to the steel industry? I understand this is the sort of program that has been operating in the United States for 40 years. It is a policy, I might also add, that I support, but the Labor Party has already made announcements. How would you see this work in steel?

Ms Murphy : I am not familiar with that program that you just mentioned, but what I would say is that there is a lot of—15 years ago I worked for the Australian Industry Group, and my grounding in that role was to go out and, basically, pound the pavement of the shop floors of metal fabrication shops and machine shops to try and get an understanding of what goes on. There is a plethora of grassroots innovation that happens that companies do not even recognise as innovation. We have such a wealth of it here that I am so passionate about. That is at risk. That needs something to hold it together or at least to have it firstly recognised and secondly then, to be supported. I am not sure if what you just referenced there, Senator Carr, provides that—

Senator KIM CARR: It was in your submission.

Ms Murphy : It is the terminology that you have—

Senator KIM CARR: 'Small business innovation research program' was the term you used? Is that right?

Ms Burdick : That was in the submission. I actually was not working with the chamber when that submission was made.

Senator KIM CARR: The point I am trying to make is this: all of the measures you have spoken of that were actually being used were aimed at training management skills; developing the capabilities of firms to be able to compete. I have often used the proposition that we do not send our Olympic athletes out in the Olympic Games to compete without training and without support. Is it your view that a similar principle also applies to Australian business?

Ms Burdick : Certainly it does. Absolutely. Everything that we are advocating is designed to assist businesses in Australia to operate on a level playing field with their foreign competitors.

Senator KIM CARR: Is that what you meant by the level playing field: the chance to actually compete fairly?

Ms Burdick : That is right. It is competing on the same terms. That is what we are talking about. We are not saying, for example, that we should not be trying to offer domestic suppliers opportunities to supply to government. We believe that small businesses should be encouraged to survive and thrive but we think the best environment for that is a free market. But we are not operating within a free market here, if we are looking at what the Chinese government, for example, is doing to prop up the domestic steel industry there. They have tariffs, they have subsidies and they have a whole raft of policies designed to support their domestic steel industry.

Senator KIM CARR: These things are often better done at a national level. You get national coordination; we live in a national economy and are part of an international economy. But there are obligations for state governments. Do you think the New South Wales government is doing enough to actually develop the industry capabilities of this region?

Ms Murphy : No.

Senator KIM CARR: Why do you say that?

Ms Murphy : There was an announcement today which leads me to believe that, in terms of—what project was it?

Ms Burdick : The Sydney Metro Northwest link.

Ms Murphy : Of which there is a Spanish component coming in. There does not seem to be a recognition. I think they are coming to terms with the recognition that there needs to be some transparency on domestic steel usage on infrastructure projects; however, the framework does not appear to be strong enough that it codifies it in any other way or, as you say, there is not enforcement on the rules that we have in place.

Councillor Bradbery : There is a local equivalent of something along the lines that you have suggested, what we call the i3net, that the council with the department of industry has set up to facilitate the opportunity for local engineering and fabrication connected with the steelworks to get out there and look at the possibilities of extending beyond the food chain that has come down from the steelworks. For many years contractors have basically just fed off the opportunities that came directly from the steelworks. Our engineering and fabrication sectors in this city have really gone places in terms of trying to do it themselves. They have worked hard. What we have done is create opportunities whereby those who have the possibilities of engaging with that sector nationally and internationally have been invited to address our particular coterie of local fabrication and engineering and build up those skill sets. But we have got limited resources as a council to do that.

Senator XENOPHON: On those, could you provide details of how you maximise that participation in the supply chain—not now—if you could provide the details of how it actually works and how successful it is.

Councillor Bradbery : Sure.

Ms Murphy : We established that network 14 years ago. It is an independent membership based type organisation that provides a project opportunity in its early stages and brokers deals for the smaller companies to get in.

Senator XENOPHON: Due to time constraints, on notice, could you just give details of how it works. That would be very helpful.

Ms Burdick : I will take that on notice.

Senator RHIANNON: You raised , Mr Bradbury, the issue of grief. I thought it would be very useful because we have not talked so much about the human component of what played out last year so if you could expand on what you saw last year and what should be done because it is obviously very relevant.

Councillor Bradbery : We have experienced such dramatic changes in our local economy and in our cities and regions, especially in the mid-80s. The mid-80s was a dreadful time here in terms of dislocation and the great downturn at the steelworks from around 20,000 employees down to around 12,000 or something like that; it was a phenomenal change. I believe human beings are quite capable of taking on board change of this magnitude. But unless you set up a climate in which there is something to aspire for or where it is leading to or a part of a narrative that informs that pain and where it is going then you are going to have reactions in your community and also implications for the present time. For instance, we have one of the largest suicide rates in the country in this region. I am not saying that is directly involved with the steel industry but what I am saying is that we are in a period of rapid change in our country. These sorts of implications for our people are something that are not taken on board in the context of what we are reflecting upon at the present time. But not only that, this city and this region experiences great challenges with intergenerational unemployment and the loss of many manufacturing low skilled or semiskilled jobs. For instance, the textile industry has gone from this area. That employed a lot of women who came from backgrounds of poor education and so on but it was an opportunity to find an income and a means of supporting their families. So we are going through this period of change.

Let me also add one of the things I am really angry about is the attitude towards vocational training—outsourcing and all that sort of stuff—and the great loss of the opportunities because we have wasted money on a sector that has done nothing more than squander and create opportunities for others to become rich at the demise of those who were seeking an opportunity to enter into employment.

Senator RHIANNON: Are you referring to what has happened to the public TAFE system?

Councillor Bradbery : Yes, I am. I have no difficulty in condemning that when we have a brilliant TAFE sector here in this city. We have the institute of technology, which is associated with facilitating those opportunities for young people to get training and to enter into these industries and opportunities that we have.

Senator RHIANNON: Before you leave that point, could you expand on it because when we were at the steelworks today, some of the workers said that they had trained at TAFE so I would see that there would be a direct link here, if TAFE has been weakened, to a problem in the level of training.

Councillor Bradbery : Yes, and also let me say that now the fees and opportunities to enter into TAFE are becoming prohibitive. These are the sorts of people who need the opportunities for them to enter into just at the basic level of opportunity for education and then they move through.

Senator RHIANNON: Getting a foot in the door and a second chance.

Councillor Bradbery : The other issue that really confronts me is the belief that the university sector is the answer to our future; it is not. It is not the only answer; it is one answer to opportunity. A strong TAFE sector, as we have witnessed and experienced in our region, is vital for our social capital. I hate to use that term and to see human beings in those terms but it is enriching our people. The success of this region over time has been the strong TAFE sector and what it has done, not only in terms of university entry. Let me go back. The University of Wollongong was originally established as an extension college of the University of New South Wales to train engineers and metallurgists and so on to facilitate the Australian steel industry, and then it moved on and is now a university in its own right. It is not only the university; the TAFE system here has been very successful over the years in preparing and training up our skills sets in this country, and it has gone well beyond this region.

Senator RHIANNON: Is it because of the high fees in the TAFE system that the value that was received has therefore been lost now?

Councillor Bradbery : I believe it is an impediment for those wanting to participate in the workforce via a vocational or trades opportunity.

Senator RHIANNON: So we are losing those pathways?

Councillor Bradbery : Yes, that is right, clearly.

Senator RHIANNON: It is obviously relevant to the whole area, but it is also relevant to BlueScope.

Councillor Bradbery : It is relevant to BlueScope, but it is also part of the ecosystem that is established around the steel industry. It is not the steel industry or raw steel production in isolation. It is what it does in terms of the engineering sector that is around it—the supportive structures, the fabrication in engineering sectors. Let me also add that BlueScope's forte is coatings; it is not raw steel production. I will be surprised if it continues with raw steel production in perhaps another 10 to 15 years time. But, at the same time, the world will change, and I am anticipating there might be opportunities for it to continue and to be supported. We have had one blast furnace already shut down, No. 6, and to reopen that would be half a billion or more in terms of expenditure. I am not anticipating, necessarily, raw steel production; but the skill sets—the engineering, the research and all those things associated with what is being created out there—are something that we need to protect. At the same time, those who are engaged in raw steel production need to have some sense of certainty and direction.

Ms Murphy : Can I add something along those same lines. Last year, in June, when BlueScope announced that they may cease raw steel production, that had a significant impact on business. We do a quarterly business survey—we have done for a number of years—and there was a massive dip in the likelihood of businesses to invest in capital and the likelihood of businesses to employ people. It is like what I tried to say in the opening statement: if BlueScope sneezes, we catch a cold. There is a ripple effect on the economy that is apparent. We had 4½ months of uncertainty in this community until, on 26 October last year, BlueScope said, 'Yes, we're going to continue with making raw steel, but we're going to, basically, lose 500 jobs.' That on its own had an economic impact. But what is more important is that businesses during that time actually went into a hiatus. They did not employ people; they did not necessarily train people. We did not see that confidence come back up again until January, when we did the quarterly stats; it was the December figures. It does have an impact on the rest of us. What we are trying to do is help ourselves to move forward in that transitioning economy and shore ourselves up so that we can be viable into the future.

Senator LAMBIE: Is the population about 300,000?

Councillor Bradbery : That would be for the region. Wollongong has around about 200,000 to 205,000 people. Shellharbour has about 67,000, with Kiama thrown into that. So you would be getting up to around 300,000—

Ms Murphy : It is 385,000 across the region.

Councillor Bradbery : Yes.

Senator LAMBIE: What is your youth unemployment rate?

Councillor Bradbery : Nationally, it is about 12 per cent. But we are usually around about six to eight per cent higher.

Senator XENOPHON: Yes, but that does not include the underemployment rate, because, with anything more than one hour a week, you are not deemed to be unemployed.

Senator LAMBIE: Yes, that is right.

Ms Murphy : Our participation rate is a couple of per cent under compared with across the state.

Senator XENOPHON: So a lot of people have given up?

Ms Murphy : Yes.

Councillor Bradbery : And that is that intergenerational issue as well.

Senator LAMBIE: That is what is going to cost us. You are heading where Tasmania is heading, I am telling you now, on the north-west coast—anywhere outside Hobart, our TAFE is demand driven. This is the situation, instead of saying to those kids out there, 'Go and get a skill and the jobs will come; they will come knocking at the TAFE door.' Your TAFE is demand driven. So, unless they have an apprenticeship, they cannot go and be a welder, a mechanic or a plumber or anything like that. They have got to have the job before they can go into TAFE—correct?

Councillor Bradbery : Yes. It is usually associated with not only the steel industry but also the mining industry, which is also decreasing. So those demands are changing. But, as indicated through my colleagues here, we have tried to create opportunities whereby we can take up that slack as well, in terms of creating those moments—like the council trying to increase cadets and apprentices and so on—so that demand is still there. But it is lessening; it is definitely changing dramatically. But then you need to remember that we are a bit different from your part of the world inasmuch as we have the biggest job market in the country nearby, and that is Sydney. So we do have that opportunity, which saves us in some respects.

Senator LAMBIE: But are those jobs in Sydney hands-on jobs or are they computer IT jobs? I guess that is what I am trying to get at here because, as you would know, some kids, especially boys, are hands-on people—they do not want to sit on computers—and we are not leaving them those options out there. What is it like here?

Councillor Bradbery : I will just respond to that inasmuch as, for instance, at the present time we have a dramatic challenge in finding enough bricklayers. We have got an expanding population. As I have highlighted, the West Dapto land release will have a population of 50,000. There will be an extra 50,000 going out there in the next 30-odd years or so. There is a demand for building trades and those sorts of things with the New South Wales building boom at the present time. Not only that, we have a hinterland just to the west of here—Wollondilly, Campbelltown, and Camden—which is one of the major growth corridors of Sydney. Those demands are there, so there are those opportunities, and the building trades are certainly one area of expansion.

Senator LAMBIE: If those demands are there and you know they are coming up, has the TAFE implemented a system where they are now taking kids off the street to make sure that they have those skills when those jobs become available, or are they still waiting for it to be demand driven? Are they one step ahead?

Ms Burdick : We take a slightly different view on TAFE and vocational education and training. We do not believe that TAFE is the only pathway or that it should be the principal pathway for young people who are looking to enter the building and construction trade and a range of other industries that are growing here. We have recommended—a number of times, I think—that government should partner with industry more closely on vocational education and training, and that means adopting examples of best practice such as Productivity Bootcamp, which we see in Mount Druitt. There is a philanthropist developer, Paul Breen, who has invested one-point-something million dollars of his own money to start up a mock construction site where he is training long-term unemployed young people and getting them ready for the workforce with some basic skills training, and employability skills as well.

Senator LAMBIE: Why can't TAFE do that?

Ms Burdick : That is the kind of thing that we are looking for.

Senator LAMBIE: I thought that was what TAFE was for. That is what the TAFE was originally for.

Ms Burdick : It would be great if TAFE did that. I think TAFE provides a wonderful opportunities for young people—really high-quality education and training—but we do not believe it should be the only pipeline.

Senator LAMBIE: You do not have much say with the TAFE here?

Ms Burdick : It is too separated from industry and business.

Senator LAMBIE: Thank you. I do not have any further questions.

Councillor Bradbery : There are some outreach programs, like pre-apprenticeship programs.

Senator LAMBIE: It is pretty sad when you have to go to outreach.

Senator XENOPHON: In terms of the 500 jobs that have already been lost, perhaps on notice can you tell us what the impact has been and how the jobs have been absorbed elsewhere? Has it scarred the area to some degree, in terms of economic impact?

Ms Murphy : There was an option to disclose something confidentially.

Senator KIM CARR: What, here? Do you want to do that confidentially?

Senator XENOPHON: You may want to put it in writing on the basis that it is confidential. That might be a more effective way of doing things, because we would have to clear the room.

Senator KIM CARR: Does that suit you?

Ms Murphy : Yes.

Senator XENOPHON: You could put it in writing and mark it 'Confidential'.

Senator KIM CARR: And request that it be confidential.

Ms Murphy : Yes, I can do that.

Senator XENOPHON: Lord Mayor, you have gone from being a Uniting Church minister to being Lord Mayor, where at the coalface you have seen the impact on communities of the issues of unemployment and the like. How do you assess the mood in the area, because it was almost a near-death experience. It was either lose 500 jobs or lose—what?—3,000-plus jobs.

Councillor Bradbery : Yes, it was about 3,200. The issue is—

Senator KIM CARR: Plus the contractors.

Senator XENOPHON: Or 4,000.

Councillor Bradbery : But then you have the ripple effect, so it is quite dramatic. To the region's credit, at the present time the diversification of the local economy has meant that in some respects this time we have escaped a bullet. I am not saying that it has not hurt—please, do not get me wrong—but 500 compared to what was lost in the mid-eighties was quite dramatic. The situation is that we have a more diverse economy, but at the same time a lot of those who were among the 500 have found new opportunities while others who chose the opportunity to take redundancy. I must say that what does concern me is the rhetoric that says that you can go and get a job in the aged-care industry, when you have been working in the steel industry. That sort of stuff does not help.

Senator XENOPHON: On the issue of procurement, what representations have you made to the state government? You can take it on notice. I think the New South Wales government's procurement policies are appalling, because they are pretty well non-existent for local content. What role do you see for local government collectively in this state to say, 'We are going to go down this path to procure locally'—to shame the New South Wales government into doing the right thing.

ACTING CHAIR: Thank you very much for your time and the effort you have put into your submissions and your evidence here today. That concludes today's hearings in sunny, downtown Wollongong. We will meet the steel industry again in Whyalla on Tuesday.

Committee adjourned at 16:21