Immigration Rise Demanded by Business Leaders

December 7, 2010

The iron ore chief and executive director of Rio Tinto, Sam Walsh stated the mining industry must persuade the public that a change in skilled immigration policy was essential for the $140 billion worth of resource projects being planned in northern Australia. "The industry has got to be careful we do not create a situation where every electrician and plumber heads west or north" Mr Walsh told The Australian.

"As we move forward with $140bn of projects, there will be shortages in specific areas and there will be an overheating of the labour market -- neither of those are good for improving Australia's terms of trade or improving the basic economics of employment in this country."

Mr Walsh will need 6000 workers over the next five years as he grows Rio's iron ore exporting business by 50 per cent and believes that the 457 visa program needs to be more flexible so skilled workers could come to Australia. "I'm talking about 457s providing more flexibility, providing a longer period," he said. "If you really want somebody to uproot themselves and come and live in a remote part of Australia, three years doesn't quite meet muster."

Mr Walsh said Rio was transporting workers to and from Western Australia's Pilbara region from Broome, Carnarvon, Perth, Busselton and Geraldton and has begun to consider other areas. The company also reimburses flights for employees that come in from the east.

Mr Walsh said it isn’t easy to attract people from the eastern states, even with the higher wages.
Workers are reluctant to uproot away from family and this is more prevalent in Australia than other countries, another reason why more migrant workers were needed.

The Business Council of Australia warned this week that pressure was emerging and a 30% wages surge in Western Australia's mining sector could lead to a larger wages blowout.

The chief executive of Leighton Holdings and president of the Australian Constructors Association Wal King said that skilled workers on big construction and remote-area mining projects were taking workers from the cities and adding to the wages pressure.

"A lot of these people have been taken out of capital cities. What you are seeing is a greater number of people being sucked out of the major cities and major regional towns because of the extent of the fly-in, fly-out from the east coast. So that's then overflowing into the capital cities because the quantum of wages that are being paid in these remote areas, that's then flowing over in pressures in the cities.”
"The comparatively high wages that are being paid in these remote areas are really drawing people away and competing with other areas of the economy."

Tony Shepherd, the chairman of ConnectEast and Transfield Services believes the main area of wages pressure is in the northwest due to the expansions in liquefied natural gas and Pilbara iron ore projects.
Companies still put effort into in-house development and training but "cannot produce skilled workers overnight".

"If locals are not prepared to fill the gap, then temporary or permanent skilled immigrants are the only timely answer," Mr Shepherd said.

Nick Greiner, former NSW premier said that skills shortages were "painfully obviously an emerging problem".

"At all levels, from semi-skilled upwards, the problem, certainly at Bradken, we are finding that it's heading back towards where it was prior to the GFC," Mr Greiner said.

He said skilled migration mechanisms, such as skilled visa Australia, needed to be expanded. The 457 visas are the most used program for bringing in temporary overseas workers.

While a number of unions are critical of them, business groups have been pressing for the visas to be expanded in areas other than mining.

"There may have been some reasons for tightening up but I think there is a danger of throwing the baby out with the bathwater," Mr Greiner said.

"There are basically no alternatives other than to allow undesirable pressures to emerge and that makes the industries that are concerned less competitive."

"There needs to be a capacity to flexibly overcome the skills shortages because there's no satisfactory alternative."

Chief executive of engineering firm WorleyParsons, John Grill, said that accelerated training was crucial but this should be accompanied by skilled immigration.

WorsleyParsons has used skilled immigration for project managers and engineers to deal with labour shortages, usually from OECD countries.

Mr Grill said that there were insufficient people working in the blue-collar trades when there was an increasingly ageing workforce.

"Part of the issue is we haven't had enough people going into the trades for 20 years, and there hasn't been a lot going on in Australia for 20 years in terms of construction work," Mr Grill said.
"There's been a reasonable amount of it in recent times and it's projected that there will be a lot of it going forward."

Mr Grill said, a system of project-based visas could be used to deal with short term skill gaps.
Richard Leupen, United Group chief executive said the Australian government needs to appreciate the difference between the skills shortage today when compared with the situation four years ago.
The situation is increasingly more specific, Mr Leupen said.

Mr Leupen said the skills needed were focused on large-scale industrial, civic and mining projects, which means there is competition for designers, project managers and engineering specialists.

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