24/03/2011 - 00:00

Barnett pushes competitive pitch

24/03/2011 - 00:00

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Colin Barnett didn’t win any friends at a rally over the issue of local content on resources projects.

Barnett pushes competitive pitch

THE campaign for increased local content in new major resources projects is gathering strength. Both sides of politics strongly support more work going to local fabrication shops.

But the resources companies are defending their position. They say a significant proportion of contracts have already gone to Australian firms; and the local bids must be competitive with those from overseas.

That’s an important point that the companies want to drive home to their critics. There will be no featherbedding. Overpriced local bids for work will not be accepted, just because of the publicity being given to the fact that many fabrication shops south of Fremantle have idle capacity.

It’s a point not lost on the premier, Colin Barnett, who was given a hot reception when he addressed the 4,000-strong rally last week in support of increased local content.

He didn’t win any friends when he said his government would not be legislating to force the companies to include a minimum level of work for local shops when letting contracts.

But he committed the government to continuing the push for more local work, and expressed confidence that tangible results would start to emerge by the end of the year.

Opposition leader Eric Ripper was roundly cheered when he announced that Labor would introduce legislation mandating minimum levels of work for local firms, flagging a clear line of demarcation between the major parties on the issue as the resources sector booms but other sectors languish.

The big turnout for the lunchtime rally on a hot Perth day signalled that the issue is generating much heat of its own, and that action is needed.

With Labor’s local jobs spokesman Peter Tinley looking on, Mr Ripper said a number of state agreement acts for projects such as in the iron ore sector already committed the companies to local involvement. These included a requirement that they move into the downstream processing area, when the opportunity arose.

It’s been a moot point over the years as to whether the companies have actually delivered, bearing in mind that in the 1960s, the pioneering spirit resulted in them building not only the railways but also the ports and the towns.

Colin Barnett is hoist on his own petard with this issue. Last year he raised expectations that the metal fabrication shops would have full order books as contracts began to be let for the $43 billion Gorgon project on Barrow Island. Chevron, which is developing the Gorgon project, says contracts worth $10 billion have already been let to Australian industry. The company says this has provided work for about 4,000 Australians, with more than 3,500 of the jobs in Western Australia.

But Chevron has also said bluntly that many Australian bids for contracts had not been internationally competitive.

It’s taken as a given that local industry is not equipped to build the giant modules, which require close to 20,000 workers during the construction phase. These sorts of jobs can only be handled in countries such as Indonesia, Thailand and South Korea.

But Mr Barnett gave cause for hope on two fronts. The first was that, after taking chief executives of major resources companies to Kwinana to inspect the capability first hand, there was an indication that some big contracts could be broken into smaller chunks to give local businesses the opportunity to bid in line with their production capacity.

The second was the emergence of the fact that some work from contracts let to Australian firms was being farmed out to offshore subsidiaries without the resources companies’ knowledge.

Unions dismissed this assertion as fanciful, but the premier says he has an assurance that this issue will be followed up. The inference is that future work let to Australian contractors will be done locally.

The advice from the companies is that many of the early bids for steel manufacturing were “highly uncompetitive”. That could have been linked with the limited economies of scale of the local producers, or unreal expectations, or both.

But there are billions of dollars in contracts from the Gorgon project still to be put to tender, and billions more for Wheatstone, should that be given the green light before the end of the year.

If the local shops can readjust their operations, and contain costs, then they could gain contracts not only for construction but the maintenance phase as well.

That would lead to work, and jobs, for years. And WA would be the winner.

No ordinary election

THE result of the NSW state election on Saturday is a foregone conclusion. The Labor government will suffer a thumping defeat after 16 years in power.

That’s good news for the Liberal-National coalition, which generally does it tough in ‘the premier state’. Many Labor supporters won’t be that disappointed either.

In short, NSW Labor has become an embarrassment. Its policies have failed to keep abreast of the times with the result that, not only is Labor’s vote in NSW abysmally low, but the state’s economy has failed to perform, with little sign that significant improvement is around the corner.

The result will represent a major setback for the ultra pragmatic right wing-controlled NSW Labor Party, which has had a track record of success as kingmaker over the past 30 years.

It was the NSW right that pulled the rug out from Bill Hayden in 1983 as party leader, paving the way for Bob Hawke to become Labor’s longest serving prime minister.

But just to show there’s no sentiment in politics, the NSW MPs used their numbers again, this time to dump Hawke for favourite son Paul Keating, in 1991, in a very acrimonious challenge.

And the faction had its hand very firmly in the play that signalled Kevin Rudd’s swift demise last year, in favour of Julia Gillard.

Saturday’s result will also confirm that the electoral pendulum in the states is swinging solidly to the Liberals.

The challenge will be for the Labor governments in Queensland, Tasmania and South Australia to stem the tide.

 

 

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