Poised on the cusp of a growth phase

17/09/2009 - 00:00

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Is WA prepared for the next wave of growth?

Poised on the cusp of a growth phase

ANYONE with a teenager knows something about growth.

The speed with which shoes, clothes and school uniforms are outgrown, not to mention the rate at which the food in the pantry and the fridge disappears, can at times be little short of breathtaking.

The key to survival involves a degree of planning - ensuring the fridge is well-stocked, the school uniforms are bought a size or two too big so they will (hopefully) last longer than a single term, delaying the purchase of school shoes until the day before term starts.

As a state we are similarly poised on the very cusp of a period of sustained growth, and like the parent of a teenager we have a fair idea what to expect and can therefore plan to ensure we prosper from what lies ahead.

The signs are certainly hard to miss.

As the peak representative body for the resources sector in Western Australia, the Chamber of Minerals and Energy keeps a very close finger on the pulse of the sector.

Our latest research shows that substantial growth is projected to return to WA in the medium to long term. Yes, the current financial crisis has caused a decline in general demand during the past 12 months and we are not out of the woods yet. However, CME expects this will be followed by an overall recovery period, with rapid growth set to resume in the early part of the next decade.

The Gorgon LNG project - approved by the joint venture partners this week, and categorised by the federal government as vital to the rejuvenation of the national economy - may well be the headlining act in this new era but it will very much be supported by a range of other highly significant projects.

For instance, we've recently seen Gindalbie's Karara iron ore project gain final state environmental approval, which - along with the Oakajee Port and Rail project - will provide a major boost for the state's Mid West.

Iron ore expansions and development continue in the Pilbara. Buoyant market conditions for gold mean new developments are being planned, while the lifting of the ban on uranium mining 10 months ago is opening up an entirely new industry for WA, with several companies developing their plans for uranium mines, primarily in the northern Goldfields. And that's just a sample of what we can expect to see over the next couple of years.

Australian Bureau of Agricultural and Resource Economics figures produced last week indicate that, even with the global financial crisis, Australia's mineral and petroleum exports increased by $159 billion during the past financial year.

All of this is going to create new demands on the critical inputs to the sector - water, energy and people.

The unprecedented growth experienced up until late 2008 resulted in increased pressure on many aspects of the state. The current economic climate provides the time required to plan and prepare for the challenges of the next wave of growth, and it is vital that this time is used productively to improve management of growth, better infrastructure planning, coordination and delivery, and workforce planning.

The greatest threat to sustained development in WA is the absence of a vision for growth. Consideration should be given to a vision for state and regional WA planning, investment in people, land and housing supply, and water management and energy security, all of which are key inputs into the economic prosperity of the state.

There is no doubt that future labour demand driven by the minerals and energy industries will continue to create pressure on the labour market, with a potential need for an additional 26,000 employees by 2013.

With more than $72 billion worth of resource sector projects either committed or planned for WA, there is continued strong demand for employees in the sector.

The number of employees in the industry peaked in November 2008, and while there were a number of job losses over the past 12 months, 3,000 more people are employed in the WA resources sector now than at the start of 2008.

Of course we don't simply need people - we also need them to be educated and trained so they are able to take on the jobs that will be generated tomorrow and into the future. This will take time. It is vital the state's education and training system gears up now to accommodate demand.

Another area that we need to address is migration. The resource sector actively promotes and supports the employment of the local workforce. Clearly the sector must attract more women, who currently comprise only 18 per cent of the workforce.

The sector is the largest private employer of indigenous Australians but even greater engagement is needed. This is a sector that competes on a global market for critical skills, and businesses are still experiencing a shortage in some areas that are important to business sustainability. To meet industry needs it is important the Australian skilled migration system is flexible and efficient.

CME therefore encourages the government to form a 'state migration taskforce', announced in the 2009-2010 budget, to ensure the development of a state migration strategy and policy framework for the next five to 10 years that is responsive to industry needs.

On behalf of the industry, we have for many years advocated for the development of a comprehensive energy strategy for WA.

When most people think of energy they think about the power required to turn on the lights or air-conditioning at home - and fair enough. But equally important is the energy required to power our major resources projects. Hundreds of thousands of jobs in our community depend upon it, directly or indirectly.

We therefore need a coordinated state energy strategy that provides a vision for the total energy solution for the future needs of the state.

This, we believe, is fundamental to the long-term competitiveness and viability of industry and the well-being of the greater WA community.

In the Pilbara in particular, there are ongoing land, housing and accommodation shortages, which are of great concern to the sector. These will only be exacerbated by the major projects now under development.

CME believes the solution is a dedicated land development authority with planning and development powers, focused on tackling this issue.

Water reform should remain a priority for the government, as the current raft of water legislation is complex and outdated, involving the interaction of myriad acts and subordinate legislation, with substantial compliance costs and uncertainty for both industry and government.

While we are writing our "wish list" in terms of planning for growth, we also need to drag the approvals system into the 21st century.

In speaking with mining and energy companies, large and small, a constant message is that the overly complicated, expensive and time-consuming approvals system threatens to inhibit the growth of our state. Approvals reform is therefore a major priority for the resources industry, founded on our belief that a more streamlined system is possible without compromising standards of environmental protection.

It must be acknowledged that over recent weeks we have seen some positive developments across several of these areas.

- The premier has announced the creation of a new Department of Training and Workforce Development. This puts training front and centre as a critical issue, with the focus and support it warrants. Up-skilling, training and workforce planning are vital to the State's economic prosperity, and a dedicated agency will ensure that training requirements are met more effectively today and into the future.

- The federal government has established a National Resource Sector Employment Taskforce. There is no doubt we are entering a period where demand for skilled workers will be a fact of life for the WA resources sector. We therefore welcome any initiative that will assist the industry in securing the people needed to build and operate the new projects that will come on line over the next few years.

- In energy we have had some significant recent advancements, with the government announcing its intention to maintain Synergy and Verve as separate entities; and arguably more importantly, flagging the development of a long-term energy strategy. CME will be seeking to work with the government and other stakeholders providing input to the development of the strategy to ensure it reflects the needs of industry.

- Mines and Petroleum Minister Norman Moore released the report of the Independent Working Group, which has been examining the approvals issue. Reform in this area has been slower than we had hoped, but there is at least a sense that we are now moving in the right direction. Of course it will be necessary to get the balance right - improving the effectiveness of the approvals process while at the same time delivering on community expectations of sustainability of the environment and a mature and respectful engagement with indigenous people.

All of this doesn't, of course, mean that the job is done. Indeed complacency about the challenges of what lies ahead is our greatest threat.

But if we put the hard yards in now, and get it right, we will be rewarded when the next wave of growth kicks in. And that will be good news for all of us.

n Reg Howard-Smith is chief executive at the Chamber of Minerals and Energy of Western Australia.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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