GEOGRAPHIC LABOUR MOBILITY - Submission on the Productivity Commission’s Issues Paper

EXECUTIVE SUMMARY

Geographic labour mobility should be viewed a positive element in a growing, dynamic Australian economy. The role that it plays in efficiently allocating resources to their greatest value across the economy has been recognised by bodies such as the Reserve Bank of Australia, the Productivity Commission and the Ministerial Council on Skilled Migration. For example, the Reserve Bank has noted that the “movement of existing workers between different jobs has been an important mechanism facilitating changes in the industry and geographic structure of employment over the past decade... that facilitates adjustment to labour shocks and structural change”.1

Geographic labour mobility is vitally important to the success of the mining industry, though a minority of the mining labour force can be described as “mobile” – with 25 per cent of the workforce undertaking Long Distance Commuting (LDC) and less than 3 per cent operating as temporary skilled migrants on subclass 457 temporary visas. The Reserve Bank has observed that LDC has “helped (mining) employers to meet their labour demand requirements given the reluctance of workers to move permanently to remote areas”.2

Claims about the negative impact of mining growth in regional areas have been disproved in a major demographic study by KPMG.3 The findings show that mining is stimulating residential population growth crucial to sustainable communities. Far from restricting opportunities, the mining industry is boosting incomes, attracting families and reducing unemployment in mining regions.

Against this backdrop, perceived negative economic and social externalities arising from mining workforce mobility have been overstated. Minerals resource companies have developed a range of strategies to address issues that need to be managed. Where there are governance issues (such as local government funding of infrastructure) these should be considered in a wider context.

Existing rigorous State and Federal assessment and project approvals processes provide mechanisms to assess and mitigate possible negative social, environmental and economic impacts. Ad hoc interventions to impede the natural flow of skilled labour are counterproductive, both economically and socially.

In general, mining companies have a preference for hiring locally as it is more cost effective than recruitment of LDC workers and temporary skilled migrants. Workforce demand for LDC workers or temporary skilled migrants is often due to factors beyond the company’s control, including: the lack of suitably skilled local people; the availability and cost of accommodation in the local community or provided by companies; the remoteness of many mine sites; and, in the case of LDCs, the desire of many mine personnel and their families to live in their home communities, often with greater amenities.

Fly-in, Fly-out work practices (FIFO) are also driven by the economics and safety of the Australian aviation industry, supported by a cultural change in society’s attitude and propensity to use air travel for multiple purposes. At the same time, governments face increasing difficulties in providing cost effective service delivery for permanent residents in mining communities. FIFO has also made it possible for employees from other parts of Australia who have lacked opportunity to participate in a growing industry – for example, previously unemployed Indigenous workers taking part in the Pathways to the Pilbara Program4 where around 120 workers are sourced from an area in northern New South Wales.

The mining sector is a relatively small user of 457 visas, with employees in this cohort making up 2.6 per cent of the mining workforce.5 However, 457 visas are effective in filling specific areas of identified skill shortages in the minerals industry, especially in the professional cohort. For example, the industry has had to rely on skilled migration for around half of its mining engineers in recent years. There is also evidence that 457 visa holders play a vital part in training Australian workers. Without temporary skilled migration, the Australian minerals industry would not have been able to respond to the significant investment demand in mining experienced over the past decade.

Meanwhile, the industry continues to spend more on training per employee than most industry sectors, with one in twenty employees an apprentice or trainee and an overall spend of 5.5 per cent of payroll on all types of training. The industry has also underpinned tertiary disciplines with $34 million worth of funding in recent years.

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