Chapter 5 Governance
Even with the paucity of data on the extent of FIFO in regional
Australia, there can be no doubt to anyone who has visited regional communities
such as Karratha and Moranbah that the prevalence of this practice is having a prfound
impact on communities. The trepidation of resource communities like Kalgoorlie
that are yet to feel the full force of FIFO is palpable.
On considering the Commonwealth’s role in addressing the impacts of
fly-in, fly-out workforce practices, it is important to acknowledge those
jurisdictions which the Commonwealth can influence directly and those which
remain the prerogative of state and local government.
This chapter will focus on key areas through which the Commonwealth can influence
the use of FIFO workforces in regional Australia when reasonable alternatives
could be available including:
amendments to the taxation regime;
- clarifying electoral
- the need for a
comprehensive Commonwealth Government policy on FIFO workforce practices; and
- the need to develop a
new approach to the governance of regional Australia.
Taxation measures to support regional communities have always been an
effective way of building them. There is significant concern that taxation
measures are driving the move to FIFO workforce practices. Now that the fortune
of resource companies is no longer tied to residential communities, tax
incentives should again focus on building regional Australia.
A range of taxation measures were identified as having encouraged the
development of FIFO work practices. Furthermore, FIFO workers are eligible to
claim taxation benefits that are intended to support those living in regional
and remotes areas.
The primary issues of concern raised in submissions are:
- the capacity of companies
to write-off FIFO expenses as a cost of production;
- the application of
fringe benefits tax (FBT) favouring the development of work camps over
- the application of
the living away from home allowance (LAFHA) to FIFO workers despite the
workplace being in close proximity to an existing community;
- the appropriateness
and application of the zone tax offset.
Broadly, the following tax benefits are available to companies utilising
a FIFO workforce:
- costs associated with
providing a FIFO workforce, including flights and accommodation are able to be
‘written off’ as cost of production;
- where flights and
accommodation are paid by the employer rather than increased salary to fund
these individually, the employee does not pay income tax or goods and services
- FIFO workers may be
able to claim LAFHAs and remote area zone tax offsets; and
- housing subsidies
paid to a permanent residential workforce attract FBT. In those communities
where companies provide residential housing, to avoid FBT implications,
companies can rent housing for a 50 per cent FBT concession, which contributes
to the high residential rental market. (See paragraph 5.19 for
Industry organisations recognise that tax incentives would be an
effective way of encouraging relocation to regional areas. Industry employer
group, the Australian Mines and Metals Association (AMMA) submitted that 95 per
cent of respondents to a member survey on FIFO work practices believe that
substantial tax incentives could be a useful tool to encourage relocation to
regional areas. Survey respondents noted:
- Tax incentives
related to home ownership in smaller communities would assist. …
- Tax concessions are
fundamental as the cost of living is out of proportion.
- Resource industry
base salaries generally are in higher tax brackets so tax incentives would be
As a general rule, the Committee has few concerns about tax exemptions
being granted to the use of FIFO for genuinely isolated projects. However,
where established towns already exist, all tax incentives for FIFO operational workforces
should be abolished and that all disincentives in the taxation system to
provide for residential workers should likewise be removed.
Fringe benefits tax
FBT is applied when an employer provides a benefit for private use, for
example, the use of a work vehicle for private purposes. The FBT was introduced
in 1986 to capture as taxable income the non-monetary remuneration of
employees. Employers rather than employees are subject to the tax.
In populous areas where there is reasonable competitive market supply, FBT
meets its intended outcomes.
Housing is one non-monetary benefit that is subject to FBT. However, in
regional areas where reasonable supply and competitive markets are not in place
and housing supply is expensive, a case for FBT exemption on housing exists. The
provision of housing is a necessity and failure of supply is a constraint on
In the context of this inquiry and of most concern to regional
communities, FBT is applicable to employer provided subsidies to permanent
residential workforces to offset the high cost of housing, but it is not
applicable to accommodation provided in work camps.
The Western Australia Regional Cities Alliance (WARCA) noted:
If FIFO workers are housed in camp arrangements there are no
FBT implications however, housing subsidies paid to a permanent resident
workforce attract this tax. Further to this, to avoid FBT implications plus
secure a 50% concession on rental costs, the companies can rent the house as
opposed to purchasing it outright....
The application of the FBT encourages companies utilising
FIFO workforces to create work camps and FIFO to major metropolitan cities or
The City of Greater Geraldton noted:
There are concerns with the current Fringe Benefits Tax (FBT)
structure that encourages companies to create camps and FIFO to major
metropolitan cities (or oven overseas to NZ and other places). Further, the
provision of the camps, services and air travel is all a deductable expense for
the mining companies. This effectively means the Government is subsidising to
the tune of billions of dollars per annum a system which is anti-regional by
It was suggested that FBT was a major contributor to the development of
FIFO and argued that the current tax arrangements penalised people becoming
part of the community:
We have had discussions with a number of the mining companies
that are working in and around Broome and we talked to them about relocating
their workers to Broome rather than having a fly in, fly out culture, and they
all come back to the tax. Fly in, fly out, they claim, is a tax deduction and
providing housing and accommodation for workers is an FBT expense ... Our
concern is that at the moment the FIFO model gets a tax exemption but to live
here and become part of the community is penalised. We would like to see
equality there and then it becomes an option, a matter of choice both for the
companies and the employees and their families.
The idea that companies are ‘rewarded’ for choosing a FIFO workforce was
prevalent among host communities; it was generally considered that the FBT was
an unstated Commonwealth Government policy that is pro-FIFO and anti-regional:
Under the current system, companies are rewarded for having a
fly-in fly-out workforce through tax cuts; what the city and the region want to
see is the government penalising companies that solely exist on a FIFO
workforce by charging fringe benefits tax on fly-in fly-out companies. They
should be encouraged to provide a resident workforce in existing towns.
AngloGold Ashanti also noted that FBT on housing was a consideration when
building in regional areas:
The cost of building and operating new resources towns is
also prohibitive, with the development of infrastructure alone in remote WA
areas estimated to cost twice as much as in Perth. This cost is further
exacerbated by the Fringe Benefits Tax (FBT) which imposes a tax impost on the
benefits received by employees in company-owned and operated towns.
In Kalgoorlie, Ron Mosby of the Goldfields-Esperance Workforce
Development Alliance noted that of the many hidden costs of FIFO, amending the
application of the FBT is an easily rectified cost that would have significant
benefits to both individuals and regional employers.
In addition to the impact on large resource companies, regional small
businesses also complained that the need to provide housing was made difficult
by the FBT obligations:
People in business are competing and they have got to provide
similar facilities and pay. We have got to be able to provide housing, and FBT
on housing is an issue. We cannot afford to provide housing at the moment.
As well as FBT not applying to FIFO camps, it does not apply to FIFO
An exemption is provided for transport costs from an
employee's usual place of residence to their usual place of employment where
the employee is employed under what is commonly known as a fly-in fly-out
arrangement and the usual place of employment is a remote location in Australia
or overseas or an oil rig or another installation at sea. This exemption covers
employees who work in remote areas and who are provided with residential
accommodation at or near the work site on working days and return to their
usual residence on days off.
The application of FBT should be subject to consideration of location
and function so that exemption applies to FIFO travel and accommodation in
genuinely remote areas and the construction phase of mining operations only.
There are real opportunities to build regional Australia with
appropriate and targeted structuring of the taxation system. As well as
reviewing the current definitions of ‘remote’ under FBT law as recommended
below, there is a case to create a ‘regional’ definition that will allow FBT
concessions to be utilised to create an incentive for regional residency.
Remote zoning definitions will need to be applied with an adequate and
realistic notion of the definition of remote location. Any definition of
‘regional’ for the purposes of taxation law should exclude all communities that
have reasonable ground transport access to a major urban area. This is further
Stakeholders who supported the current taxation arrangements in relation
to FIFO consistently argued that people could not be forced to live in a
location and that they must be offered choice about where they resided and
worked. However, as the current taxation regime discourages regional home
ownership or the provision of housing to residential employees, it can be
argued that far from offering a choice, the current arrangements only encourages
The recommendations the Committee is making in relation to FBT are not
intended to penalise workers or restrict choice in employment. The Committee intends
that the Commonwealth Government should not be subsidising corporate decisions
in relation to their workforce practices.
The Committee recommends that the Commonwealth Government
review the Fringe Benefits Tax Assessment Act 1986 to examine the:
of impediments to the provision of residential housing in regional
of the exempt status of fly-in, fly-out/drive-in, drive-out work camps that
are co-located with regional towns; and
of the exempt status of travel to and from the workplace for operational
phases of regional mining projects.
Living Away from Home Allowance
The LAFHA is a fringe benefit under the FBT Act in the form of an
allowance paid by the employer to ‘compensate for additional expenses incurred
and any disadvantages suffered because the employee is required to live away
from their usual place of residence in order to perform their employment
The LAFHA does not have a set value, as long as it is determined to be
‘reasonable’. The Australian Taxation Office (ATO) provides the following
example of the payment and taxable value of the LAFHA:
Under the definition, those eligible for the LAFHA are ‘employees who
move to a new locality with an intention to return to their old locality at the
end of the appointment’.
Recent amendments to the FBT Act limit the exemption of
the LAFHA to a period of no more than 12 (non-consecutive) months.
However, all workers under FIFO/DIDO arrangements are exempted from this
The recent House of Representatives Economics Committee inquiry on the
Bill supported this exemption and a broadening of the eligibility of ‘primary
residence’ to encompass those FIFO workers who maintain a residence other than
an owner-occupied house (i.e. living with extended family, friends or
overseas). The Economics Committee opined that this ‘supported regional areas’. 
This Committee strongly disagrees with this opinion. The ongoing payment
of allowances through the taxation system to encourage and support FIFO work
practices is completely contrary to the aim of building regional Australia.
By providing a specific exemption for FIFO workers in the FBT Act, the
Government has enshrined an ongoing disadvantage to those residing in regional
Australia. The long-term eligibility of FIFO workers to access this tax
concession is a contributor to the choice not to live in the region:
Some of the problems that we came across, in particular with
the Whitsunday region with regard to existing mines in Collinsville, is that
the living-away-from-home allowance is beneficial to those who are outside the
region rather than to those who reside within the region.
Workers living in the communities being most impacted by FIFO question
why they are undertaking the same job for less take-home pay:
I have examples of young blokes in Collinsville—we could be
working side by side, he is from Brisbane and I am from Collinsville, and he is
on $300 a week more than me because he gets a living away from home allowance.
If the whole thing was flipped and the guy living in the rural community gets
the $300 and the bloke flying in who wants to choose to fly in does not get it
then it would build up regional communities and get workers out of the south
Those receiving the allowance could reasonably expect to receive an
allowance of several hundred dollars per week. Despite the costs of living in
resource communities that this allowance is intended to offset, from
submissions to the Economics Committee inquiry, it is clear that workers
receiving this allowance are not necessarily spending it on work-related living
expenses, but consider it a ‘top-up’ to the household budget.
Submissions to the Economics Committee argued that the 12 month limit
was arbitrary and may lead to workers choosing not to work on construction
projects where the project time exceeded 12 months.
Given that an employee may ‘pause’ their receipt of the allowance when
at home (not on shift), the allowance will continue to be paid beyond a 12
calendar month period.
When in St John’s, Canada, the Committee was told that, after
significant local opposition to a 5 000 bed workers camp, the project
operator offered a ‘local allowance’. This allowance was paid to all of those
who chose to live locally rather than FIFO. The camp has now closed and many of
the employees have chosen to settle their families in the region.
This demonstrates that with the appropriate financial incentives,
individuals would prefer make to choice to settle with their families close to their
The market must determine worker availability and employers should be
paying adequate compensatory salary, not relying on the Government to provide
allowances. The Committee does accept that there may be a case for some
construction FIFO workers to be paid the LAFHA beyond 12 months where there is
a finite project life. However, this exemption should be given on a project,
not industry-wide basis. This exemption should only be provided to projects in
the construction phase or in a remote area where FIFO is unavoidable.
The Committee recommends that the Commonwealth Government review
the Fringe Benefits Tax Assessment Act 1986 to:
the general exemption for fly-in, fly-out/drive-in, drive-out workers from
the 12-month limit of payment of the living away from home allowance;
specific exemptions for construction projects that have a demonstrated
limited lifespan; and
specific exemptions for projects in remote areas where the fly-in,
fly-out/drive-in, drive-out work practice is unavoidable.
Zone tax offset
The zone tax offset is available to those who have lived or worked in a
remote area for 183 days or more in given tax year.
The tax offset is applied in three zones – Zone A, Zone B and special areas
within each zone. The entitlement amount varies depending on the relevant zone.
Three concerns were raised with the application of the zone tax offset:
- the eligibility of
FIFO workers to claim the offset despite not incurring the higher cost of
living in the zone area;
- the payment level of
the zone tax offset to adequately reflect the cost of living in regional areas;
- the definition of
It should be noted that the zone tax offset and overseas forces tax
offset are categorised together for the purposes of personal income tax
assessment. The below discussion
does not refer to the overseas forces component of the tax offset.
Eligibility of claimants
The zone tax offset is claimable by anyone who lived or worked in a
remote area, not necessarily continuously, for 183 days in a financial year. In
some circumstances days may be ‘carried over’ from one financial year to the
next. Under this definition, FIFO workers who work more than 183 days in a
financial year are able to claim the offset.
A number of submitters raised concerns that FIFO workers are eligible to
claim zone offsets without incurring the cost of living in the remote area,
which is the primary purpose for the remote area offset.
The Pilbara Regional Council submitted:
The conditions for claiming this allowance, however, are such
that a regular FIFO worker, based in a main centre, can almost always claim the
rebate despite him or her not incurring any of the higher costs associated with
living in a remote region due to the fact that their daily accommodation, food
and transport expenses are met by the employer.
For those eligible to claim the dependent spouse and child rebate, a 50 per
cent additional rebate is available for those who are eligible to claim the
special areas and ordinary Zone A with a 20 per cent addition for those eligible
for ordinary Zone B. This rebate is available to the recipient of the zone tax
offset regardless of where dependants are living.
Treasury provided the following scenario:
Jack and Dianne live in Perth with their two children, Chris
and Meg, aged 12 and 10. Dianne does not work and has no adjusted taxable
income. Chris and Meg also have no adjusted taxable income. Jack has a
taxable income of $70 000. Jack works in Marble Bar and spends two thirds
of the year there. The rest of the family remains in Perth while Jack is
Because Jack resides in Marble Bar for the majority of the
year he is eligible for an ordinary Zone A zone tax offset comprising the
following components: a basic amount of $338 and 50 per cent of the
‘relevant rebate amount’ he is entitled to, which for him comprises the
notional dependant spouse with child offset ($2 736) and two notional
student offsets ($372 each), or 50 per cent of $3 488 which is $1 744.
In total Jack is entitled to a zone tax offset of $2 082.
Others submitted that despite the additional money being earned due to
remote area work, FIFO workers ‘spend their monies and invest in the area that
their families reside, not in regional Australia.’
It is the role of employers, not the government, to encourage non-resident
employment through the payment of appropriate wages. The zone tax offset is not
a tool to subsidise practices that are damaging to regional communities and it
is a misuse of this allowance to support workers and their families who incur
little or none of the additional costs of living in the zones. The zone tax
offset should only be payable to those whose primary residence is in the
eligible zone to offset some of the expenses incurred specifically due to
The Committee recommends that the Commonwealth Government review
the Zone Tax Offset arrangements to ensure that they are only claimable by
permanent residents of a zone or special area.
Level of rebate
The tax zone rebate is applied in three zones with an additional percentage
(20-50) paid for notional tax offsets. The offset is paid in a base fixed
amount of $338 for zone A (50 per cent), $57 for zone B (20 per cent) and
$1 173 for special areas (50 per cent).
For a family living in ordinary zone A, the following scenario was
Oscar and Lucinda live in Marble Bar with their two children,
Thomas and Lydia, aged 12 and 10. Lucinda does not work and has no adjusted
taxable income. Thomas and Lydia also have no adjusted taxable income. Oscar
has a taxable income of $70 000.
Oscar is eligible for a zone tax offset comprising the
following components: a basic amount of $338 and 50 per cent of the ‘relevant
rebate amount’ he is entitled to, which for him comprises the notional
dependant spouse with child offset ($2 736) and two notional student
offsets ($372 each), or 50 per cent of $3 488 which is $1 744. In
total Oscar is entitled to a zone tax offset of $2 082.
The zone tax offset may have been adequate in helping to offset the
additional costs of living in a remote area many decades ago, however as Mayor
Darryl Gerrity of West Coast Council in Tasmania stated, ‘the [zone B allowance
is] about a carton of beer.’
Given the additional costs of living in regional and remote areas for
services, such as the need to travel for medical services, the zone tax offset
should be reviewed upwards.
A wide range of figures were suggested for upwards review of the zone
tax offset. While the zone tax offset should be reviewed to more adequately
reflect costs associated with living in remote Australia, it is not appropriate
for the Committee to specify by what amount this allowance should increase.
Definition of zone areas
During the course of the inquiry it became apparent that the definition
of zone areas is not determined by any modern concept of remoteness nor
accurate population figures.
The ‘Australia’s Future Tax System Review’ (the Henry Review) found that:
The zones were established in 1945 and the boundaries have
remained broadly unchanged since 1956. Given changes in population and the
distribution of industry and transport infrastructure since 1956, many areas in
the zones are not disadvantaged or isolated. On the other hand some remote
areas fall outside the zones. For example while Darwin is in Zone A and
Townsville and Cairns are in Zone B, Ivanhoe, in western New South Wales, with
a population of around 250 and more than 200 kilometres from the nearest town
with over 2 500 people, lies outside the zones.
The current definition of ‘remote’ would encompass many regional centres
that are not remote by modern standards. Some towns that are genuinely remote
are not included in any zone area. In addition, as well as the zones having
been defined in 1956, the special areas are based on 1981 census figures and so
do not reflect Australia’s current population profile.
The Henry Review also recommended that the zone tax offset should be
reviewed ‘based on contemporary measure of remoteness’.
The Committee supports this recommendation and further finds that the
utilisation of 1981 census figures for defining the special areas is
inappropriate and should be reviewed.
In addition, the offset should include a mechanism to ensure that it is
regularly reviewed to reflect accurate population figures.
The Committee recommends that the Commonwealth Government
review the Zone Tax Offset to ensure:
it provides reasonable acknowledgement of the cost of living in remote
the zones are based on a contemporary measure of remoteness;
the zones are based on up-to-date census figures; and
it includes a mechanism for regular review to ensure that the offset reflects
accurate population figures.
Voting and electoral enrolment
FIFO workers spend a good proportion of their time in a different region
to that in which they vote. This raises a number of concerns in ensuing that FIFO
workers have suitable access to voting services during an election. These concerns
- accessibility to
voting systems; and
- modernising the
The ability to cast a ballot is a fundamental right and responsibility
of all Australians. It is the responsibility of the Australian Electoral Commission
(AEC) to ensure that all Australians are able to access electoral services in
order to exercise their democratic right and responsibility to vote.
The AEC noted that the increasingly broad geographic catchment from
which FIFO workers are enrolled, together with fluctuations in populations in
remote regions, makes accurately anticipating and planning for the provision of
voting services in remote locations difficult.
Peter Kramer, State Manager and Australian Electoral Officer for Western
Australia, confirmed that: ‘there would be a very, very small number of people
who would not easily have an opportunity to vote,’ and that, ‘no-one would be
prevented from voting, simply because there are so many different ways for them
to cast their vote.’
The voting services which are available to FIFO/DIDO workers include:
- mobile polling;
- postal voting;
- pre-poll voting at a
designated pre-poll voting centre (PPVC); and
- static polling.
At the 2010 federal election, 682 PPVCs were established across
Australia in a range of metropolitan, regional and remote locations where
FIFO/DIDO workers live and work. 
PPVCs were established in:
- towns located near
mining operations, such as: Nhulunbuy, Jabiru, Weipa, Cobar, Narrabri, Mudgee
and Lightening Ridge;
- regional cities
servicing mining operations, such as: Dubbo, Gladstone, Rockhampton and Mackay;
- mining accommodation
centres located at: Coppabella, Dysart and Nebo;
- regional towns
serving as FIFO transit points, such as Karratha and Port Hedland; and
- domestic and
international airports, including: Kingsford Smith, Tullamarine, Brisbane,
Cairns, Coolangatta, Perth, Adelaide, Darwin and Alice Springs airports.
Pre-polling at airports is becoming increasingly popular. The AEC
recorded significant growth in the number of votes cast at PPVCs at Perth
airport over the last three federal elections: 3 188 votes cast at the
airport in 2004 federal election; 4 544 votes cast in the 2007 federal
election; and 9 012 votes cast in the 2010 election.
The AEC, where possible, also facilitates on-site voting. Ed Killesteyn,
Electoral Commissioner, stated that:
...by and large we find that mining companies are generally
positively disposed towards cooperating with the Australia Electoral
However, the AEC noted that the direct provision of voting services to
larger mining operations can be challenged not only by the remoteness of the
site but also by the willingness of the site’s management to facilitate on-site
voting. This issue is further complicated if a site’s workforce includes a
range of subcontracting companies. Mr Killesteyn stated
that the reluctance of resource companies to allow on-site voting usually stems
from concerns regarding the occupation health and safety risks of allowing
untrained AEC officers on-site.
The AEC also noted that it is exploring new ways in which to modernise
the electoral system, without compromising security or accuracy, to further increase
accessibility for voters in remote regions, stating that:
…for people who are in remote areas, our services are moving
into increasing use of electronic facilities.
Trials for electronically assisted voting for blind and low vision
voters as well as remote electronic voting for Australian Defence Force (ADF)
personnel serving overseas were held during the 2007 federal election,
following the recommendations made by the Joint Standing Committee on Electoral
Matters (JSCEM) of the 41st Parliament in its report into the 2004
The combined cost of the trials was over $4 million, with an average
cost of $2 597 per vote for the trial of electronically assisted voting
for blind and low vision electors and $1 159 per vote for the remote
electronic voting trial for selected defence force personnel serving overseas.
This compares with an average cost of $8.36 per elector.
Whilst the trial was considered a success, its cost was deemed
prohibitive and the JSCEM of the 42nd Parliament recommended that it
be discontinued. The AEC also noted that:
Security concerns and the difficulty of providing electors
with unique on-line identifiers are still seen as obstacles that have not yet
However, despite these concerns the AEC expressed its support for
alternative mechanisms to modernise the system. Mr Killesteyn noted the recent
introduction of remote electronic voting in New South Wales, stating that:
In the New South Wales election this year , some
40 000 people availed themselves of that facility, and I suspect that it
is likely to become more popular as time goes on.
Whilst the maintenance of the security and reliability of the voting
system must not be compromised, it is important to consider the ease of accessibility
offered to Australians living and working in regional and remote communities.
The Committee strongly advocates the right of Australians living and
working in remote locations, including the FIFO workforce, to cast their vote
and exercise their democratic responsibility with equal ease to those
Australians living in metropolitan centres.
If companies are unwilling to allow site access to the AEC for whatever
reason, this limits the capacity of those workers on long shifts to vote.
However, as most accommodation sites have reasonable internet access as a core
facility for workers, electronic voting may be the most accessible method of
providing access to these workers to vote.
Despite the multiple methods provided by the AEC to facilitate voting,
the rise in airport pre-poll votes is evidence that there is an increasing need
to focus on ensuring that FIFO workers have adequate access to voting
While there might be high initial costs to develop and establish a
remote electronic voting system, it is essential to preserve and support ease
of access to voting for dispersed populations.
Therefore, the Committee recommends that the AEC develop an electronic
voting system focussing particularly on facilitating easier access to those
living and working in remote areas.
The Committee recommends that the Commonwealth Government
charge the Australian Electoral Commission to develop an electronic voting
system for voters living or working in remote areas to facilitate easier
access and ensure more accurate population figures are recorded.
Commonwealth agencies’ responses to FIFO
Due to the lack of data on the extent and impact of FIFO workforces,
governments at all levels do not have the necessary information to develop
effective policy on the issue. At present, except for the FIFO coordinator
role, no Commonwealth initiatives even attempt to focus on the unique issues
and impacts associated with the use of FIFO workforce practices. The
Construction, Forestry, Mining and Energy Union (CFMEU) asserted that ‘to date,
both Federal and State Governments have not grasped the implications of FIFO it
is time they did so’.
Consistent, Australia-wide policy action is required on a myriad of
subjects ranging from health service delivery to housing affordability and community
Whilst some of these FIFO related matters lie outside Commonwealth
jurisdiction, there is a clear need for leadership at the national level in
identifying the needs of FIFO affected communities and ensuring, as far as
possible, a nationally consistent response.
In Port Hedland, local government stated that:
Talking from the point of view of the Shire of East Pilbara,
we probably have not seen the feds. We have a lot to do with the state, because
they release land and a lot of the infrastructure is based around state issues.
In my area, we have not seen the feds through this growth phase.
In Perth, Deidre Willmott, Group Manager of Approvals and Government
Relations at Fortescue Metals, stated that:
the most important thing is that we [act] as a nation and the
federal government, as our leader of the nation in the federal parliament, need
to decide whether we actually want to promote regional growth and whether we
want to encourage the labour movement that the resources industry gives us,
fundamentally north and west.
The lack of presence and initiative displayed by the Commonwealth on the
issue of FIFO workforce practices were consistently demonstrated throughout the
Department of Regional Australia, Local Government, Arts and Sport
The Department of Regional Australia, Local Government, Arts and Sport’s
(DRALGAS) clearly outlines the Department’s responsibilities, stating that:
The Department works to ensure that the Government has a
coordinated approach to take into account the needs and priorities of regional
Australia in the development of Government policies and programs.
DRALGAS should be leading and coordinating the Commonwealth’s response
to the consequences of the use of FIFO workforce practices in regional
Australia. However, the Department could only note that it had received a
number of accounts from Regional Development Australia (RDA) committees
outlining some of the challenges being faced by regional communities.
DRALGAS’ submission, and appearance before the Committee, demonstrated
that the department has a fundamental lack of understanding regarding the
impacts of FIFO workforce practices. For instance, a detailed account of the National
Disaster Recovery Taskforce was provided which, whilst utilising
mobile construction workforces, does not constitute FIFO workforce practices.
The inability to articulate the issues or impacts of FIFO coupled with the lack
of any mention of response to address the impact on regional communities is disappointing.
When asked by the Committee to explain why DRALGAS had not previously
made any attempts to investigate the use of FIFO or its impacts on regional
communities, an official responded:
As the first port of call it is typically the state
government that would do that work, because they obviously have the
responsibility for the performance of local government. We have not, to my
knowledge, done a study on that in the Commonwealth.
While the primacy of state government in FIFO related matters is
acknowledged, this statement exemplifies a lack of initiative and leadership
regarding an issue that is radically changing the
social fabric of regional communities.
Department of Sustainability, Environment, Water, Population and
In 2011, the Department of Sustainability, Environment, Water,
Population and Communities (SEWPaC) published Australia’s first sustainable
population strategy, Sustainable Australia – Sustainable Communities: A
Sustainable Population Strategy for Australia (the strategy).
SEWPaC stated that the strategy aims to:
Ensure that [FIFO] population changes are well managed to
avoid possible impacts on the quality of life in our communities, our economic
prosperity and our natural environment.
However, the strategy provides little insight into the impacts of FIFO in
resource communities, nor does it provide any direction regarding possible
strategies to address these impacts. Only three pages of the 88-page strategy mention
FIFO (referred to as long-distance commuting) and this occurs as an aside in a
chapter discussing regional populations.
Not only is little written about FIFO and its impacts on regional
communities, but the strategy also demonstrates a disquieting lack of understanding
regarding the nature of FIFO and its impacts, stating that:
In considering these impacts it is important to recognise
that non-resident workers are not unique to resource regions and that our
cities and urban areas also have many non-resident workers.
This statement dismisses the experiences of small regional communities
who are struggling to accommodate, support and service large FIFO populations.
It also demonstrates SEWPaC’s lack of understanding of the challenges faced by
resource communities. The Committee is disappointed in the lack of
consideration and respect that this statement affords to resource communities.
The strategy also fails to provide any information or advice regarding
how to address the impacts of FIFO populations on regional communities. It
mentions ‘plans’, ‘steps’ and ‘strategies’ but does not elaborate on what these
steps or strategies should entail. The document offers high level responses to
FIFO that are of little practical value:
Regional workforce plans that include strategies to manage
the impacts of major resource projects on the community and maximise
opportunities for local people, can ensure a more effective, sustainable,
SEWPaC’s apparent lack of understanding regarding both the nature and
impacts of FIFO workforce practices on resource communities is alarming. While
serving to raise awareness of FIFO related challenges, the strategy does not
outline the issues, their causes or any possible solutions or strategies to
limit the impact of FIFO populations on regional communities.
Department of Resources, Energy and Tourism
In 2006, The Department of Resources, Energy and Tourism (RET) published
a handbook titled Community Engagement and Development: Leading Practice
Sustainable Development Program for the Mining Industry. RET presented this
The business case for, and leading practice on, community
engagement and development, particularly in relation to regional and remote
communities and mining operators’ obligations in relation to it. The handbook
includes coverage of FIFO operations.
The handbook dedicates only a single paragraph to FIFO workforce
practices and its claim regarding the degree of impact that FIFO practices have
on regional communities is contrary to the evidence received by the Committee. Specifically,
the handbook claims that:
Although the social impacts of fly-in, fly-out operations on
surrounding areas are likely to be less than for residentially-based
operations; this does not absolve fly-in, fly-out operations for responsibility
for supporting locally focussed community development initiatives.
The statement relating to the responsibilities of FIFO operators to
local communities is consistent with best practice. However, the claim that the
social impacts of FIFO are less than residentially based operations highlights
a lack of understanding of the nature these impacts. While residential
workforces may have a greater impact on regional communities, evidence to this
inquiry supports the positive impact of a residentially based workforce on a
local community as opposed to the essentially negative impact of FIFO.
The handbook makes the assumption that FIFO is only present in very remote
locations and, as such, only impacts small remote communities. It does not take
into consideration the myriad of sizable regional communities such as Karratha,
Port Hedland, Moranbah, Narrabri, Roxby Downs, Kambalda and Kalgoorlie which
are impacted by FIFO workforce arrangements.
RET’s intentions to provide a business case and leading practice on
community engagement and development are commendable. However, a business case
and leading practice which does not appropriately understand in all its facets such
a commonly utilised work practice, such as FIFO, is counterproductive to
addressing the impacts of FIFO on regional communities.
A gap exists in leadership at the national level with regards to the impact
of FIFO workforce practices on regional communities, which requires the serious
attention of Commonwealth agencies. The three agencies discussed above, which
are responsible for regional communities and resources, need to put the impacts
of FIFO workforce practices on regional communities on their respective agendas.
The failure of the bureaucracy to address the needs of regional
Australia is a long-term systemic failure of successive governments to
successfully identify and plan for the needs of the regions. Posited within
this historical context, the continuance of the current governance model will
only serve to fail to address the needs of regional Australia. FIFO is
symptomatic of this ongoing failure.
There is general recognition that resource regions are significant
economic drivers of the nation and that this will continue to be the case for
the foreseeable future. Commonwealth and state governments need to recognise
the pressure that the pace of growth has levied on essential services and
infrastructure and work in a coordinated fashion to ensure that adequate
planning and future proofing is put in place.
This issue crosses multiple portfolios and jurisdictions. However, little
at present is being done to develop a coordinated response in support of
affected regional communities and there is a need to overhaul the regional
Based on evidence of ‘Royalties for Regions’ in Western Australia, the
Committee supports the concept of a dividend being returned to resource
communities. The Committee believes there is an obligation on the Commonwealth
to take responsibility for policy gaps relating to the mining industry and FIFO
workforce practices and to ensure that policies are adequately funded.
remoteFOCUS, part of Desert Knowledge Australia, an organisation
sponsored by industry, the Commonwealth and Northern Territory Governments,
provided compelling evidence about the inappropriateness of the structural
governance arrangements affecting remote Australia.
remoteFOCUS suggested that all of the issues raised through the course
of this inquiry are symptomatic of ‘the normal processes of government [not
dealing] with the issues that are of concern to people in a satisfactory
A remoteFOCUS report, released in September 2012, found that:
- It is not clear who,
if anyone, is setting the priorities for remote Australia and what those
- The current
arrangements—comprising three tiers of government and a series of ad hoc
regional arrangements—appear to be incapable of resolving both the priorities
and the contests that need to take place around these arrangements.
- The structure and
configuration of institutions across remote Australia are therefore largely not
“custom-built” or fit for their particular purpose.
- Consideration of
economic circumstances is crucial in establishing priorities in remote
Australia and the private sector has been more successful in working through
these issues than has government.
- Failure to innovate
is most marked in the public sector.
It is time for a radical rethinking of the governance model of regional
Australia. Many of the concerns about the increasing FIFO workforce and lost
opportunities for regional communities are primarily concerns about governments
at all levels failing to develop the tools to understand and act on the needs
and desires of the residents of regional Australia.
The limitations in the responses of Commonwealth agencies to this
inquiry support the contention that current governance structures are
inadequate to provide a considered and consistent response to regional concerns
raised by FIFO work practices. The recommendations of this report refer to and
seek action in relation to a specific issue. However, the matters these
recommendations identify are symptomatic of a far greater systemic failure to
address the concerns of regional and remote Australia.
To this end, the Committee supports Desert Knowledge Australia’s
proposal that the Productivity Commission investigate how governance reform may
act as a micro-economic stimulant in regional Australia and what institutional
reform needs to take place in order for such governance reform to occur.
The Committee recommends that the Commonwealth Government
charge the Productivity Commission with investigating a more appropriate form
of governance for remote Australia that is flexible and responsive.
A case study in coordinated response
There is a clear need for a coordinated national response to the growth
in FIFO work practices. Although the states and territories have the most
significant responsibility for planning and service delivery to local
government, the Commonwealth also has significant program responsibility for
resource, environment and regional policy that is being delivered in an ad-hoc
While in Alberta, Canada, the Committee met with representatives from
the Alberta Oil Sands Sustainable Development Secretariat (the Secretariat).
The Secretariat was established:
… in the summer of 2007 to address rapid growth issues in the
oil sands regions of Alberta. The Secretariat collaborates with ministries,
industry, communities and stakeholders to address the social, infrastructure,
environmental and economic impacts of oil sands development. It acts as a main
point of contact for inquiries from the public, industry and stakeholders on
the government’s plan for managing growth in the oil sands.
The oil sands are the biggest driver of Alberta’s economy, however, as
is the case in Australia’s states, the provincial government was approving
development in isolation from an overall view of the impact on local
communities. Municipalities successfully argued that if the Province is
approving development, it needs to do so with a coordinated view of the needs
of local government areas.
The Secretariat is now responsible for:
assessments for oils sands development;
- implementation of a
long-term strategic plan to assess and improve local infrastructure and service
needs as well as regional infrastructure sustainability plans;
- developing a social
and infrastructure assessment model to ‘determine the social investment
required to provide public services and goods’ in regional communities; and
- implementing the
provincial policy, Responsible actions: A Plan for Alberta’s Oil Sands,
which outlines the roles for governments, industry and communities to address
the ‘economic, social and environmental challenges and opportunities’ in the
The Secretariat also coordinates its activities with an industry group
of oil sands developers. The Mayor of Fort McMurray, the most significantly
impacted town, told the Committee that the ability of industry to provide
future planning data anonymously has greatly assisted in the capacity of
impacted communities to develop more accurate growth plans.
The sensitivity of competition policy and movements in the stock market
means that companies are often unable to release the information that
governments need for appropriate future planning. By having a mechanism that
allows companies to reveal this information anonymously and in a secure manner,
Alberta’s future-planning capacity has been greatly strengthened.
The Secretariat was initially headed by a former industry vice president,
which gained the essential support of industry, and has the authority to direct
work across portfolios so that initiatives can be aligned and work is not
duplicated. It is also underpinned by an extensive body of work that has
identified the full impact of resource development on local communities.
The Alberta initiative relies in part on the willingness of resource
companies to cooperate in a process that assesses the collective and cumulative
impacts of their operations in that province.
The Committee heard of a similar partnership in Newfoundland and
Labrador where Rio Tinto subsidiary Iron Ore Canada initiated a partnership
between itself and other companies operating in the region to engage with the
local government on strategic planning issues. This is an approach that the
Committee encourages companies in Australia to take.
A key concern expressed to the Committee by local governments in
Australia throughout the inquiry the apparent lack of coordination between
state and Commonwealth agencies responsible for mine approvals and grants
funding is resulting in inadequate planning in local communities. The absolute
dearth of empirical evidence about the real impact of a FIFO workforce on
regional communities is also hindering the capacity of the Commonwealth to put
in place any meaningful policy or programs on the issue.
There is an urgent need for a Commonwealth Government program area to
address the needs of regional communities impacted by resource development.
This program area should focus on:
- the collection of
empirical data regarding the gaps in:
services, including emergency services; and
for resource development and associated workforce needs.
- the development of
regional social and infrastructure impact methodology that will assist resource
companies and local governments in assessing the impact of current and planned
resource projects including cumulative impacts;
- the development of
regional infrastructure plans; and
- the coordination of
community benefits agreements as discussed in Chapter 3.
The states have responsibility for many of these areas and any
commonwealth agency charged with this responsibility would need to consult with
state governments in its work. However, the resources industry is one of
national importance, as is the health of our regional communities, and thus this
issue needs a national focus.
The Committee recommends that the Commonwealth Government establish
a dedicated secretariat, within an existing government department and based
on the Province of Alberta Oil Sands Sustainable Development Secretariat, with
responsibility for consulting with state governments and the resources
industry in order to:
nationally consistent data regarding the impact of fly-in, fly-out workforces
on housing, infrastructure, healthcare, education, social services and future
planned resource development;
a regional social and infrastructure impact methodology that will assist
resource companies and local governments in assessing the impact of current
and planned resource projects including cumulative impacts;
regional infrastructure plans; and
promote and coordinate community benefits agreements.