WHEN a group of industry leaders gathered at WA Business News this month to discuss the cost of doing business, they raised plenty of worrying issues, but also found one good news story in a most unlikely place.
WHEN a group of industry leaders gathered at WA Business News this month to discuss the cost of doing business, they raised plenty of worrying issues, but also found one good news story in a most unlikely place.
It was back in 2005 when Labor was in power, Ljiljanna Ravlich was education and training minister and Norm Marlborough was the minister assisting.
ABN Group managing director Dale Alcock, who had long been frustrated by Western Australia’s archaic apprenticeship system, recalled going to see Ms Ravlich.
“She was the sixth minister that had been handed the baton to reform apprenticeships and nothing had happened,” he said.
“I went to her and said: ‘you’ve got a chance to do this’.”
The result was a rare occasion where business, government and unions worked together to quickly achieve lasting reforms.
The agreed changes led to a fundamental shift in the apprenticeship system, from time-based to competency-based apprenticeships.
“To her great credit, she got no credit, and Norm Marlborough ... these were the biggest reforms to apprenticeship training delivered in this state in over 100 years,” Mr Alcock said.
He attributes the success to several factors: direction and leadership from the top; a commitment to “get in and do the job” within six months; the use of regulation rather than legislation; and the fact there was no cost to government.
Mr Alcock also praised Ms Ravlich for putting trust in a panel of business leaders, including himself, restaurateur Kate Lamont and Steve Murdoch, who at the time was chief operating officer of Austal.
“It was about trust, because if you melt it all down, government generally doesn’t trust business, we seem to be the big monster,” Mr Alcock said.
“But if they can find a way to bring business in, to assist with some of the reforms that need to be done, there is a win-win.”
Mr Alcock was speaking at a boardroom forum jointly hosted by WA Business News and the Chamber of Commerce & Industry WA to discuss the cost of doing business.
The discussions will help to inform a major policy report by the CCI, which is seeking to quantify the cost of doing business in WA and identify potential improvements.
CCI general manager advocacy David Harrison told the boardroom forum that four key issues had emerged in its recent business survey, which was supported by WA Business News and accounting firm BDO.
The hot-button issues were:
• labour shortages and associated wage pressures;
• taxes, and in particular
payroll tax;
• industrial relations, including the use of inappropriate awards; and
• regulation and red tape.
Mr Murdoch, who currently runs Mid West iron ore miner Karara Mining, said his experience with apprenticeship reform held a very clear lesson for businesspeople advocating change.
“The business community needs to lead it,” he said.
“We would have got nowhere on that reform if there hadn’t been two or three of us driving the unions and driving the bureaucracy.”
Mr Alcock agrees, but is frustrated by the lack of progress in tackling costly red tape and cumbersome regulations.
“If that can be done around training, which was locked up for 100 years, why can’t we do these things in other places?” he said.
Similarly, Mr Murdoch has seen more problems than solutions in his dealings with government.
“When you deal with the bureaucracy, you get put through all these hoops and ask why you have to do this,” Mr Murdoch said.
“And it escalates everywhere you go.”
CCI chief executive James Pearson believes one of the problems is a lack of trust in business, by both Labor and conservative governments.
“There is not enough trust in business to do the right thing, so there is a tendency, if in doubt, to regulate; if in doubt, assume business will do the wrong thing,” Mr Pearson told the forum.
“And if you penalise the majority in order to catch the few who do the wrong thing, well that’s just the price that business has to pay.
“It’s a strange situation in a state that clearly depends so much on private sector investment and risk taking.”
Cedar Woods Properties managing director Paul Sadleir recounted a story from one of his staff to illustrate the regulatory burden facing his land development company.
“The oldest guy in my company, who retired about five years ago, told a great story,” Mr Sadleir said.
“He said ‘Paul, the first sub-division I did had about four conditions; power, water, sewer and gas’.
“The most recent one he did, we were up to 65 conditions.”
Mr Sadleir shakes his head when thinking about the number of departments Cedar Woods has to deal with, and the complexity of the conditions it faces, especially for any development that’s not ‘run of the mill’.
He cites international studies to provide some context.
“The World Bank’s ‘ease of doing business’ report put Australia 10th,” Mr Sadleir said.
“Perth is the eighth most liveable city in the world, according to the Economist Intelligence Unit.
“We come 63rd for ease of gaining construction approvals.
“That’s the complexity we’ve now got in the system.”
Simon Withers has seen the issues surrounding land development and local government approvals from both sides.
He is mayor of the Town of Cambridge and, in that capacity, also sits on the management committee of Tamala Park, a 2,500-lot land development at Mindarie.
“I’ve actually been horrified by the number of consultants and the amount of paperwork and the time its taken, its been an eye-opening experience for me,” Mr Withers said.
He believes the Town of Cambridge is one of several councils setting an example.
“We have a fast-track approval process, which is five days, for a fully compliant R-code development,” Mr Withers said.
“There is no reason why any council can’t do that.”
Mr Withers said that, based on his experience, part of the problem was the culture of government agencies.
“I’m happy to say that in my local government we have a service mentality, and I inherited that when I got there,” he said.
“The alternative is an approving mentality, which means you get to do this when I say you can.”
Mr Withers said some state government departments, such as the mines department, had a service mentality, but many others did not.
Mr Murdoch was also concerned about the performance of government departments.
Companies like Karara (a subsidiary of Gindalbie Resources) that are developing major projects are assigned a lead agency (or department), which is meant to facilitate a path through the project approvals process.
“It all depends on whether you get a good agency,” Mr Murdoch said.
Mr Murdoch said the long lead-time for projects was highlighted by the fact that Karara’s Chinese partner had planned and built a new steel mill in the time it took to get environmental approval for a mine in WA.
Like many people in WA, Mr Alcock hankers for a leader like former Victorian premier Jeff Kennett, who pushed through many reforms.
Mr Alcock would start with the 139 local authorities in WA.
“We need a Kennett-style reform, there are too many local governments,” he said.
“The outcome of not doing that is what you get in my home town, Cottesloe, which is a museum by the sea that doesn’t progress because there is no sophistication in that local authority to deal with the big issues.”
Mr Alcock believes Victoria also provides a good example on building licences.
“We’ve waited 15 years for private certification of building licences in this state.
“In Melbourne, they’ve had private certification for years.
“You make changes to plan, a private certifier comes in and stamps it, and you’re on site the next week.”
The building industry had good news on this front this week, when Commerce Minister Simon O’Brien announced the introduction of private certification.
Mr Alcock said a Melbourne office development undertaken recently by ABN Group provided a real life example of how expensive it was to do business in WA.
The cost of the building and fit-out was between 65 and 70 per cent of the cost of an equivalent building in Perth, and the time from purchasing the land to opening the doors was 15 months.
“We were amazed, we were gobsmacked, and it’s almost encouraged us to ramp up the business in Melbourne because it’s just easier,” Mr Alcock said.
Akamai Management Group’s Tri Suseno said the finance industry in WA was part of the problem.
He described the industry as “pretty backward” saying “the monopolies of the banks are not friendly for business”.
Mr Suseno said it was cheaper to get an Australian dollar loan in Singapore than Perth.
