Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

On 8 February last, I spoke in this place about the dramatic challenges facing Australia as a result of the so-called mining boom. I drew attention to a report by Port Jackson Partners which detailed the enormous growth in the mining industry in this country. The report looked at implications for Australia's economy and the necessary workforce—I note in passing the strong support given to those findings by inference by Treasury Secretary Dr Parkinson and by Mr Gary Banks of the Productivity Commission, particularly in the context of Australia's place in the world and the overall strength of our economy—the threat being our failure to grasp the opportunities now presented.

In summary, the points so well articulated by these people, supported by voluminous and detailed evidence, are as follows. There is a massive shift in the world economy from Europe to the developing world, especially in manufacturing. That is notwithstanding the current conditions of recession and decline in Europe. The growth of the middle class in Asia in particular has only just begun, with massive potential. The continuing growth in the economies of China and India will continue unabated. Demand for Australian raw materials will continue to grow rapidly. And, despite growing competition from South Africa and South America, and reducing prices, volumes of exports from Australia will continue to increase. The nature of this new demand is such that there is no pause or end in sight—that is, the massive growth in demand and income from mining is now a permanent part of our economic framework, and we should stop hedging about the likelihood of any return to the old boom-and-bust paradigm which has been a feature of the mining industry for so long, or so long associated with it.

In that context the analysis continues consistently to draw attention to these opportunities. More importantly, it points to the need to allow our economy to adjust, and to facilitate the necessary change as a matter of urgency. This is in an economic climate of continuing strong growth, low debt, strong currency and low interest rates, not to mention terms of trade which are the highest in over 140 years. It acknowledges the reality of long-term trends, around the Western world at least, of continuing decline in agriculture and manufacturing industries, with the critical point that to try and prop them up with continuing subsidies is both wasteful and myopic, especially in light of the other challenges and opportunities knocking on our door.

More specifically, it must be emphasised that these new opportunities and growth areas are not directly in the mining industry itself. They are already occurring and growing rapidly in support industries: engineering, construction, high tech equipment, processing and analysis, accountancy, transport, communications, infrastructure development, finance and so on—that is, traditional service industries but with a rapidly shifting focus of support to the mining industry as feeders in particular.

The risk is that the shift will be impeded by interference, or by failure to actively facilitate that change. Regardless of the emotions and romantic notions surrounding the old industries and trades, this shift, while inevitable, is not new. As Mr Banks pointed out, employment in manufacturing since 2005 has decreased by 59,000, but in mining it has increased by over 100,000. The critical point, however, is that employment in the services sector grew by 1½ million people in the same period. This growth in part reinforces the point about the broader impact of the dramatic growth in mining and mining investment. The problem is that the realisation and the shift in action and policy are not happening fast enough. Skills shortages remain one of the big show stoppers. The other is the serious lack of capital, made worse by the GFC. The best example of how all this fits together is my home state of Western Australia. I am indebted to the analysis of KPMG in their reports on Australia's infrastructure and resource industry needs, and of similar work by the Bureau of Agricultural and Resource Economics.

With respect to the workforce, unemployment in Western Australia is currently 25 per cent lower than the national figure at just over four per cent. However, other economic indicators are just as impressive. Average economic growth is averaging over 5½ per cent, but after the GFC it is likely to stabilise at a little over four per cent. Employment in the mining industry has grown from 26,500 to over 10,000 in the last 10 years. Investment is growing at an annual rate of 20 per cent and is almost 30 per cent of the national total. The value of Western Australian exports has doubled over the last five years. The output from mining and gas continues to grow. For example, iron ore production is up almost nine per cent and for LNG it is over eight per cent. It is estimated that in 2010 in excess of $217 billion was invested in new projects or projects in the pipeline. Further, in the September quarter last year, exploration increased by seven per cent to a value of almost $500 million.

This growth in capital investment, however, is not so much in minerals but in energy and infrastructure. These new projects include: the Wheatstone LNG project valued at $29 billion, the new Shell oil and gas project at Browse Basin valued at $12 billion, the Fortescue iron ore project Solomon Hub in the Pilbara valued at almost $3 billion, the Anketell port project valued at $3.1 billion, not to mention the massive Gorgon project costing $43 billion. In all there are around 40 projects located in areas as diverse as the North West Shelf, the Pilbara and across to the Darling Range.

The demands for both capital and skilled labour for all of these projects are obvious. It is estimated, for example, that Western Australia will need 488,000 extra workers between 2010 and 2020 across all industries. Of this growth, only 16 per cent is for the mining industry itself, the other 84 per cent being largely for the service sector. But there is a growing need for higher skills training and tertiary qualifications. The question though is: where does all of this skilled and necessary labour come from?

Migration is one part answer, and so is transfer from other states. This is already happening, but not fast enough. Commonwealth government programs such as the half a billion dollar national development fund will also help, as will the $1¾ billion allocated by the Commonwealth for vocational training. State efforts should not be overlooked, and neither should the not insignificant efforts of individual and particular companies. But as KPMG point out, the real issue in the economic restructuring task we are facing now is workforce mobility. That is not to say that everyone shed from employment in the east should pack up their bags and head across the Nullarbor to Western Australia. But it does mean that employment is shifting rapidly to service industries away from traditional manufacturing. The point is not about impeding this shift by continuing to support the marginal, but is about cushioning the blow and facilitating the transition, as we always have. For Western Australia, the simple fact is that infrastructure construction is lagging way behind including for housing, communications, and urban facilities, not to mention ports, rail tracks, pipelines and processing plants. That requires skilled people but also massive and urgent infrastructure investment.

As Engineers Australia and the Business Council of Australia continually tell us, this situation is getting worse. The simple point continually made by all expert commentators is that investment must go to those projects yielding the highest economic and social returns. For us that includes the needs of Indigenous people, where at last change is taking place as they are being trained and put to work with enormous potential for their own future growth and welfare. Those companies active in fostering that employment must be congratulated. I also congratulate my colleague Minister Martin Ferguson for his tireless and ongoing efforts. I simply hope that before long opinion leaders, and the media in particular, seize the facts about the transformation struggling to get underway. From that might grow a stronger understanding and flexibility within the community which welcomes the change instead of looking for life rafts.