26/11/2009 - 00:00

Will the west miss the bus, again?

26/11/2009 - 00:00

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A new report highlights the challenges facing Western Australia as rapid growth resumes after a one-year lull.

Will the west miss the bus, again?

DURING the long-running economic boom that came to a sudden halt just more than a year ago, the number one issue for most businesses was the shortage of skilled labour and, in many cases, the shortage of productive labour of any description.

This problem led to the preparation of several detailed reports by peak business groups pointing to the prospect of worsening labour shortages in future years.

The global financial crisis led to a belief that the problem was off the agenda for the foreseeable future.

That belief was very short-lived, at least among businesses in WA, many of which are seeing the re-emergence of labour supply pressures.

For businesses in the north of the state, especially in the Pilbara, the problem never went away. Travel to Karratha, Port Hedland or Newman and you will see boom towns in full swing.

Whether policy makers in the Rudd government in Canberra are tuned into the state of business in WA is another question. The answer is probably no.

Policy makers in the Barnett government know exactly what is going on, but are they making appropriate policy plans?

Former under-treasurer and current Australian Capital Equity chief executive, John Langoulant, pondered this question when he launched a Technology and Industry Advisory Council report this week.

The report’s title is self-explanatory: ‘Managing Western Australia’s Economic Expansion: The Need for People and Skills’.

Mr Langoulant said the report’s distinction was that it was one of the first comprehensive studies to draw attention to the re-emergence of skill and labour shortages as the state entered another phase of strong economic growth.

“This report is important as it causes us again to reflect and hopefully to act,” he said.

“Will we stumble through being ill prepared and inflexible in the face of these opportunities and reinforce the boom-bust traditions of this state or will we be truly transformational in our approach?”

The report’s delayed release is not an encouraging sign. TIAC chairman Michael Henderson said it was completed in February but could not be released until this week – mainly because TIAC was caught up in an innovation review that has led to its abolition (see page 3). And also, I suspect, because policy makers had other priorities in February, when the GFC was top of mind.

Whatever the reason, the report is now public and estimates a shortfall of 190,000 workers in WA by the year 2016.

If the final number is only half that level, or even less, it is still a major policy issue.

There are no simple solutions. Boosting education and training will help the state fine-tune the skills of its workers but will do little to boost overall supply.

Boosting migration is the obvious pressure valve to lift labour supply, but that raises a host of other policy issues relating to housing supply, land releases, regional development, health and education services, and so on.

If the latter issues are not addressed, the state will suffer from any surge in population growth.

Mr Langoulant, who spent many years studying these issues in his past roles at Treasury and the Chamber of Commerce and Industry WA, emphasised that the policy choices are complex and multi faceted.

“Anyone who thinks that the issue of labour and skill shortage can be fixed by tweaking one or two policy leavers is sadly mistaken,” he said.

He expressed concern that “we may have missed the bus again”.

“One thing is for sure though there will be many more cycles and strong underlying growth so we had better change our thinking otherwise we will be known as the jurisdiction that constantly misses the bus,” Mr Langoulant said.

The challenge for the Barnett government is to prove him wrong by developing clear, coherent, long-term policies to address deep-seated issues like the skills and labour shortage.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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