There’s all this opportunity, all these contracts available, but we can’t get the people.
Skills and education arose as key issues during the inquiry. Witnesses talked about skills shortages, and the need for more investment in training and upskilling of individuals and businesses in regional areas to meet the demands of the mining sector.
Witnesses also talked about the need for businesses in the mining equipment, technology and services (METS) sector to work together to maximise opportunities to compete for mining company contracts, through ‘clustering’.
The inquiry sought to discover how businesses and communities can better prepare themselves for mining ‘boom and bust’ cycles, and for the eventual wind-down and withdrawal of mines.
This chapter discusses skills and training, technology, innovation and opportunities for diversification in regional economies where mining plays an intricate part. It concludes with recommendations for increasing the capacity and sustainability of mining towns and regions.
Skills shortages and skills development in regional areas
At public hearings in Tamworth, Port Hedland and Kalgoorlie, the Committee heard evidence that many regional communities are struggling to meet the demands of mining investment boom cycles. Communities struggle to provide enough skilled workers and skill-up potential workers quickly, while businesses struggle to take on contracts because they can’t expand fast enough.
Mr Drew Wagner from the Northern Territory (NT) Division of the Minerals Council of Australia cited issues with the ‘preparedness of service providers, businesses and suppliers to be ready for the next wave of investment’.
Mr Wagner specifically identified skills shortages in surveying and mine site rehabilitation as pressing in the Northern Territory.
Mr Michael Broekman from the Gunnedah and District Chamber of Commerce and Industry, reported a significant loss of potential income for his brick making business caused by a lack of available workers:
In the 2016-17 financial year, I reckon we lost on a million dollars worth of work because we couldn’t find enough staff. That happened again in 2017-18.
Mr Broekman elaborated that it was becoming impossible to employ truck drivers, plant operators, and other skilled trades, and that, in his opinion, TAFEs were underfunded and no longer focussed on trades training.
Councillor Andrew Hope from the Liverpool Plains acknowledged that small businesses struggle with the costs of accreditation and ongoing retention of skilled staff, especially with the cyclical nature of the mining industry. He proposed subsidies for small businesses in the towns and regions of greatest need to help address this.
Mining companies submitted that they undertake various training programs, including apprenticeships. Examples included:
The BMA Apprenticeship Program for people living in Central Queensland, which took 41 apprentices in 2018 for trades such as electricians, mechanics, diesel fitters, auto-electricians and boilermakers.
Roy Hill’s ‘greenie’ program, which trains people who have no experience in the mining industry, including Indigenous people.
Rio Tinto’s local trainee program, which has about 60 trainees from the local Pilbara region, and formal apprenticeships programs, which takes on between 30 and 50 apprentices a year.
Local Hunter miner, Bloomfield’s apprenticeship and trainees programs, which have around 40 apprentices currently engaged.
Some witnesses argued that mining companies are not doing their fair share of training. Mr Owen Pike from the NT Manufacturer’s Council asserted that mining companies do not take on enough apprentices:
They demand such an influx of trades, but they’re not committing enough back. … I’ve got more apprentices at that trade school than the big mining companies. They’re the first ones to demand all the labour.
Mr Pike referred specially to the INPEX project in Darwin, which recently launched 250 apprenticeships. He acknowledged that 250 apprentices may seem like a lot, but it represents less than one per cent of the workforce of more than 14,000 people.
Witnesses proposed that businesses in mining areas needed to be supported so that they could take on more apprentices, which would provide more capacity to service the mining sector.
Mrs Adrienne Rourke from the Resource Industry Network reported that a lack of confidence in the future of mining sector work leads small and medium sized enterprises (SMEs) to fear putting on apprentices:
An apprentice is a four-year commitment. It’s a catch 22 at the moment. They need the skilled workers now, and so everyone is saying, ‘What about apprentices?’ Yes, that’s right, but we need to actually fill the work that we’ve got happening now, so that we can look at apprentices and have the cash flow and the work there as well to do that.
Mrs Rourke suggested industry associations, government and the private sector ‘still have a job to do on the messaging’ around assuring apprentices and others that there is a future in the mining and METS sectors.
One mining services company (name withheld) suggested that businesses would have more confidence to put on apprentices and trainees if mining company contracts were longer, for instance four years. The proposal included a suggestion to incorporate apprenticeships into the contract.
Where training is available, some witnesses questioned if it is imparting the right skills. Mr Broekman explained that his business needs employees who are ‘work ready, and what’s coming out of the education system isn’t work ready’.
Most witnesses agreed that trades training and apprenticeships were the responsibility of large and small businesses, communities, and governments alike. However, Mr Broekman believed that the small business sector is supplying more trained staff into ‘the pool’ than other sectors.
Mrs Stacey Cooke from Gunnedah and District Chamber of Commerce and Industry suggested local businesses are paying to train employees who then leave to work in the mines, meaning the local business has, in effect, subsidised the mining sector.
Councillor Hope identified a lack of focus on trades by TAFE NSW and other training bodies and a paucity of relevant course offerings in regional New South Wales.
Mayor of Cessnock, Councillor Bob Pynsent said his region has the same issue, with TAFE losing funding and courses being withdrawn or moved to Newcastle. He questioned: ‘… how does a young person without a vehicle themselves get to Singleton or Muswellbrook to be trained?’
Mr Angus Russell from Rockhampton Regional Council said training should be conducted closer to where industry works. Similarly, Gunnedah Councillor, Gae Swain proposed that mining companies should engage with TAFE to deliver trades training to students on local campuses, which would ‘go a long way to help keeping them in the district, thus addressing skill shortage’.
Mr John Walker, CEO of the City of Kalgoorlie-Boulder suggested that companies and governments at all levels need to anticipate and prepare for skills shortages by developing education and employment plans.
Mr Robert Hicks reported that, during the mining construction boom, Kalgoorlie was the first region in Western Australia to develop a workforce development plan. However, despite its history of workforce planning, the Committee heard Kalgoorlie businesses are now experiencing great difficulties in sourcing and retaining staff.
Owner of the Overland and Miners Rest Motels, Mr Aaron Heal, explained that sourcing staff was a constant problem for his business, with many locals preferring to work in mining, where the pay rates are much higher.
Mr Heal said that backpackers were a good source of workers. However, they are limited in how long they can work for him, because his business is not eligible to be a regional provider of the ’88 days’ backpackers require to get a second year visa. Mr Heal also relies on skilled migration visas to bring in chefs, but these are getting harder to obtain.
Kalgoorlie business owner, Mr Laurie Ayers reported that he had 10 roles to fill that he could not fill: ‘I want to venture and grow my company, but I know that there is no chance after 28 years and four cycles of wasting my money on Seek.’
One way witnesses suggested dealing with this issue was through skilled migration. Mr Walker said he was lobbying government to provide more accessible pathways for skilled migration to regional areas desperate for workers. He asserted:
… we need that commitment, because we have some 1,500 jobs available here today. We have a shortage in skilled people coming through from the schools, the School of Mines particularly, and we need in the short term to be able to bring skilled migration here through a DAMA … We’ll be seeing Minister Tudge on Monday as well to see whether the Kalgoorlie area and the Goldfields can become a trial for migration in this country.
Competition for skilled workers
Regional business owners and industry associations described the significant problem of losing workers to the mining sector. Mr Neil Lethlean, from Capricorn Enterprise said that the high wages offered by mining companies result in a loss of skilled personnel from other sectors.
CEO of the Northern Territory Farmers Association, Mr Greg Owens confirmed that the agricultural sector also competes with mining companies for skilled labour, especially machinery operators. The issue is compounded by the fact that businesses in agriculture and horticulture can’t generally offer such high wages.
The problem was also apparent in Kalgoorlie. Mr Heal reported losing chefs ‘to drive trucks out at the nickel smelter because they could pay them almost twice the amount we could.’
Mr Jason Russo from the Department of Industry, Innovation and Science confirmed that the Department is aware of some regions reporting an ‘outflux of skills, labour and young people’ to go and work in the mines where incomes are higher.
Some witnesses went further, claiming that mining companies actively ‘poach’ workers through labour hire companies. Mr Lethlean reported that labour hire companies are engaging employees of local businesses ostensibly to complete a set task with a limited timeframe, then ‘poaching’ those workers by asking them to quit their jobs and sign on with the labour hire company.
The Committee heard evidence about the kinds of training and education strategies that could boost the capacity of regional workforces to service the mining industry.
Prof Carthew from Charles Darwin University highlighted the importance of partnerships in teaching, training and research, providing the example of the partnership between Charles Darwin University, Rio Tinto and the Indigenous Gumatj Corporation.
The Gumatj Corporation are opening a bauxite mine in East Arnhem with support from Rio Tinto. In partnership with Rio Tinto, the university has developed a training program for Indigenous people wishing to work in the mine. Prof Carthew added:
These sorts of partnership opportunities can really facilitate and enable regional communities and Indigenous communities to engage in the mining industry and get the skills and training that they require.
Professor Fiona McKenzie explained that Rio Tinto has also initiated a local apprenticeship program where apprentices train with the local Shire, ‘enabling the apprentice to live locally but also bolstering resources in the local government sector’.
Professor Sue Carthew confirmed that people who come from the regions and are trained in the regions are ‘much more likely to stay in those regions than those recruited from elsewhere’.
Prof McKenzie argued that training programs are becoming inaccessible in rural, regional and remote locations. She gave the example of the TAFE system in Western Australia, which she said no longer supports local traineeships. She wrote:
Without the support of mining companies, in Broome for example, the opportunity for local residents to train for mining jobs and engage with the mining sector would be non-existent.
Whitehaven Coal’s CEO, Mr Paul Flynn told the Committee that Whitehaven partners with local businesses to inform the Gunnedah TAFE about the general need for tradespeople:
Say the local service station has a need for electricians, for instance, and we’ve got a need for 10. What we’re doing is pooling all the needs so that we can actually have a community based picture of what the need is for those trades…
Mr Flynn suggested that more training could be done in Gunnedah, because at the moment a lot of apprentices have to travel to Tamworth to attend courses.
Councillor Swain agreed with this assessment of Gunnedah TAFE, saying the town’s excellent TAFE campus ‘is grossly underutilised’ and locally-based training would help keep young people in the town.
Hunternet’s Mr Wayne Diemar said that TAFE training also needs to keep up with new skills and technologies required by modern tradespeople.
Witnesses in Singleton complained that the New South Wales school system does not allow its students to engage with TAFEs, because they prefer to promote university entrance. Mr Adrian Price, from Australian Industry Group said:
We need engineers, but we also need the technicians and tradespeople, because they’re the ones who have the ability to turn ideas into reality, and they also maintain, in the mining sense, equipment and structures.
The Committee heard that universities should also play a role in educating the mining and METS workforces of the future.
Prof Carthew argued that regional universities needed to provide courses suited to regional students and Indigenous students, who may be lacking in experience in the higher education system. She proposed ‘nested systems’, where students can ‘build from a VET certificate 1 through to 2, 3 and 4 and into a diploma, associate degree, bachelor and so on’.
The Professor also encouraged governments to fund scholarships and cadetship schemes, the creation of high-quality distance-learning course materials, and regional study centres focussed on learning the skills required for mining and METS.
Mayor Hope confirmed the importance of online learning for regional and remote tradespeople.
Mining company, ConocoPhillips advocated for more pathways for students to move into the industry through education, citing programs like the Queensland Minerals and Energy Academy and the Central Queensland University STEM Central.
Best practice examples were presented in relation to Newcastle University. Dr Richard Bush, from the University of Newcastle, talked about the new tertiary knowledge hub opened in Muswellbrook in partnership with TAFE and local government, saying:
We’re bringing our academics up there and we’re working on professional short courses with industry people, upskilling those that are working in the industry.
Big mining companies also reported on their training strategies. Fortescue’s Mr Tom Weaver talked about Fortescue’s VTEC training program, which he said ‘literally takes people from welfare to work’, and their ‘trade-up program’. The trade-up program allows workers without a qualification to become qualified in a trade with Fortescue’s support.
Fortescue also provide financial support for the Hedland Senior High School Trade Training Centre and provided four school based traineeships in 2018, which guarantee employment with the mine.
The Minerals Council of Australia stated that ‘Australian mining invests more in training its workforce than other industries’ and presented a number of examples, including:
Programs to encourage young people to pursue careers in science, technology, engineering, maths, and trades.
Employing approximately 7,600 apprentices, representing around four per cent of the workforce (double the national average of 2.1 per cent).
Contributing more than $50 million to higher education, supporting 4,500 people to graduate with tertiary qualifications in mining disciplines.
A Future Minerals Workforce Program, launched in 2016, to determine what skills and capabilities are needed for the future of the industry.
Western Australian-based witnesses talked about the Western Australian School of Mines, which saw a big reduction in enrolments due to the mining downturn and changes to skilled migration which affected international student numbers.
Kalgoorlie Mayor Mr John Bowler said in 2013 there were 321 enrolments in the School of Mines, and in 2018 it was only 90. He proposed governments need to ‘move quickly’ to ensure mining, engineering and metallurgy are offered and supported at major universities.
Mr Walker said that there was a perception that the mining boom ended, but in reality, it did not:
The construction boom did but mining continues at record levels. I think the gold production out of Kalgoorlie last year was at record levels. The risk of filling skilled mining engineering roles through overseas workers is high if we can’t get them up. We recommend strongly that government and education work together to offer scholarships with the mining industry to make sure we get people there.
Glencore told the Committee that it is directly involved in initiatives to increase numbers of mining engineers, including scholarships, involvement in secondary schools, promoting STEM subjects, and community forums.
Mayor Bowler appealed to the federal government to revert to the old skilled migration system for overseas students enrolled in mining and metallurgy, where, upon graduation, these students were ‘almost assured’ that they would get residency in Australia.
METS, innovation and ‘clustering’
The mining equipment, technology and services (METS) sector is a major contributor to regional jobs and economies. Deloitte Access Economics estimates that the METS sector employs approximately 1.1 million Australians, which is significantly more than the approximately 220,000 people employed directly by mining. Research undertaken by industry growth centre, METS Ignited, suggests the number is even higher at 314,00013 people.
The METS sector is also an export success story. Witnesses submitted that Australia has a significant presence in the international METS sector, with over 150 Australian METS companies operating in Chile, and over 50 operating in Peru.
Initiatives to support the METS sector
The federal Department of Industry, Innovation and Science (DIIS) administers a number of initiatives to help grow and support the METS sector, including:
The AusIndustry initiative, which provides ‘a range of services and advice to help businesses start, run, innovate and grow’.
The Entrepreneurs’ Programme, delivered by AusIndustry, which aims to improve business competitiveness and productivity though providing a national network of 130 business advisors and facilitators, as well as grants to facilitate business management and innovation and accelerate commercialisation.
The Industry Growth Centres initiative, which includes six industry growth centres, focussing on increasing collaboration and commercialisation and improving international opportunities. Two of these work with the mining sector: the oil, gas and energy resources growth centre, National Energy Resources Australia (NERA); and the METS growth centre, METS Ignited.
NERA Growth Centre: The NERA Growth Centre is working with the energy and resources sector to ensure it ‘competitive, sustainable, innovative and diverse’. Part of NERA’s role is to promote fit-for-purpose regulation.
METS Ignited Growth Centre: METS Ignited is located at the Queensland University of Technology and supports the development of the sector, by working with Australian mining industry suppliers, global miners, researchers and capital providers.
NERA runs an Innovations Vouchers Program, which provides a $20,000 voucher to eligible businesses to help them respond to technical challenges and innovate.
METS Ignited activities include provision of the:
METS Ignited Project Fund which provides co-funding for collaborative, industry-led projects with commercial applications (with matching investment from industry);
METS Masterclasses which operate in regional areas to assist METS companies to understand and benefit from the evolving industry landscape;
METS Accelerator Program which is a pilot program to accelerate the commercialisation rate of mining technologies in Australia. Activities are undertaken in conjunction with the Queensland Government (six of eight late-stage start-ups and small-to-medium enterprises selected for the METS Accelerator Program are based in regional Queensland. Further information is available at METS ignited start-ups); and
METS Bowen Basin Cluster Program which is designed to identify and support the clustering of technical and business expertise in the Bowen Basin. The program aims to foster high-tech innovation for distribution to a growing international market, which in turn will lead to jobs and growth in regional areas.
In addition to the above, DIIS reported on a government commitment to fund $50 million towards the MinEx Cooperative Research Centre, in partnership with the mining industry. The MinEx Cooperative Research Centre will focus on improving drilling methods; developing new technologies for collecting data while drilling; bringing forward mine production; and the Implementation of a National Drilling Initiative.
Other initiatives detailed by DIIS included:
The Northern Australia Infrastructure Facility: A $5 billion loan facility that aims to support economic and population growth in northern Australia.
The Exploring for the Future Program: A four-year $100.5 million investment by the Australian Government ‘to drive the next generation of resource discoveries in northern Australia, boosting economic development across this region’.
Investments through Geoscience Australia.
Working with CSIRO Futures to ‘help translate science into strategy and plan for an uncertain future’. This includes the development of the METS Roadmap in May 2017.
METS Ignited submitted that ‘targeted industry-government matched assistance’ is required to ensure a positive future for regional METS economies. Further, that governments and industry need to assist METS companies to diversify into other sectors such as energy, agriculture and transport.
Isaac Regional Council commented on the complexity of accessing some of the federal and Queensland Government industry support programs, saying:
… navigating the web of federal and state grants and applying for such grants can be challenging for small businesses. IRC recommends that the Federal Government … co-fund [with industry] a Community Grants Advisor/Officer within mining regions to assist regional businesses to navigate and apply for grants.
The Minerals Council of Australia applauded Austrade’s initiatives to promote and support Australian METS companies in expanding into overseas markets.
The Minerals Council also cited Queensland’s 10-Year METS Roadmap and Action Plan, which ‘seeks to leverage’ expertise within Queensland’s mining and METS sectors, and research organisations, and includes funding a new Centre of Excellence in Mackay.
R&D Tax Incentive
Witnesses also commented on the Research and Development (R&D) Tax Incentive (the Incentive), which encourages businesses to invest in R&D by providing:
a refundable tax offset for certain eligible entities whose aggregated turnover is less than $20 million
a non-refundable tax offset for all other eligible entities.
Reay Services Group submitted that, while welcome, the Incentive provides funding in arrears, meaning businesses still rely on cash-flow throughout the year. Further, that the complicated process acts as a deterrent to some companies getting involved in R&D.
CE Smith & Co Chartered Accountants also proposed that the Incentive is ‘prohibitively complicated’, further stating:
We have experienced a number of clients who would be eligible for benefits under the R&D concession arrangements who choose not to pursue a claim due to the administrative burden.
As such, CE Smith & Co recommended the Government review and simplify the Incentive, introducing:
a simpler application process;
a cap to the value of refundable tax offsets available; and
removing the requirement for activities to be conducted by a corporate entity.
A major topic in discussions around supporting the regional METS sector was the topic of ‘clustering’. Clustering is a practice whereby industry, research organisations, and the government sector partner together to foster innovation.
Mr Ric Gros from METS Ignited argued that clustering is the most effective way for governments to support the METS sector. However, a ‘well-defined, long-term commitment to clustering in Australia’ is lacking and funding levels are low and unclear. He argued for the creation of ‘an integrated policy around clustering’.
The Association of Mining and Energy Related Councils claimed that cluster development facilitates stable growth in the METS sector, encourages the sharing of skills and knowledge, boosts commercialisation of local products, and builds capacity across the broader industry.
Mr Gros suggested Australia should adopt the European clustering business model as best practice for developing regional economies. He explained that Europe has ‘adopted this model over 30 years and currently have over 2500 clusters across the European Union with 1 in 3 jobs within clusters’.
Witnesses suggested many mining jobs of the future will be in the METS sector, because of the move to automation. Mr Gros argued for clear regional development policies, coupled with cluster policies, to develop capacity in the METS sector, especially in the regions.
One way to boost clustering in regional areas, Mr Gros said, is through ensuring Cooperative Research Centres Projects (CRC-P) are located in regional areas and complementing the research focus with a focus on innovation. He suggested a percentage of CRC-P Grants should be reserved for particular regions.
METS Ignited also submitted that all of the current mining Remote Operating Centres are currently based in metropolitan locations, but there’s no reason they should not be in regional centres.
Mr Gros reported that METS Ignited is in the early stages of discussions with major mining houses about developing regional cluster initiatives and needs an investment commitment from the Federal Government. He said:
I’ve got major miners saying that they’re prepared to put funding into a start-up slush fund initiative—they’re keen about a [venture capital] structure—if that was to be matched by government.
The Greater Whitsunday Alliance Ltd suggested the Committee should recommend that the federal government ‘commit to engaging with METS Cluster programs to develop new initiatives to expand the supply chain’.
Examples of clustering
Witnesses provided some examples of clustering in action.
The Minerals Council of Australia talked about a project between Commit Works and Anglo American which provided a ‘real-time platform’ for managing frontline work plans. This project won the METS Ignited Collaboration Award in 2017.
BHP submitted evidence on local industry partnerships in Port Hedland, including the Hedland Collective, which is working on a long term plan for investment in infrastructure and programs, and the Web Business Hub. The Web Business Hub is an online tool to promote growth and diversification of East Pilbara businesses through the Port Hedland Chamber of Commerce and other funding partners, including BHP. BHP invested $1.7 million in the project.
The Greater Whitsunday Alliance Ltd talked about the Bowen Basin Cluster Program, which includes a Development Manager employed by METS Ignited, and funding for cluster projects provided by the federal and state governments.
The Resource Industry Network in Mackay referred to the Innovative Solutions Program, conducted in Moranbah and Brisbane in successive years. The Program provided training to business leaders on how to promote themselves and pitch their product or service.
The Association of Mining and Exploration Companies also talked about the Pollinators project, based in Geraldton, which is a regional business innovation incubator.
Mr Walker described the Kalgoorlie-Boulder mining innovation hub, the Cooperative Research Centre for Optimising Resource Extraction, which supports regional development, and builds skills and expertise in the region. Mr Walker recommend that the federal government continue to fund the hub beyond 2021.
Opportunities for businesses to diversify
The Committee heard from many witnesses that towns and regions needed to diversify their economies to survive in the long term, and that regions with diversified economies are better able to weather mining downturns.
Prof McKenzie cited research that demonstrates the importance of communities avoiding dependency on the mining sector and pursuing economic diversification. She submitted:
The federal government does not have to necessarily intervene but where there is the leadership opportunity to guide new development and employment opportunities it will make a difference.
Councillor Swain suggested Gunnedah’s mix of mining, agriculture, manufacturing and processing provides diversification that ‘shields’ the community in the event of a downturn in one sector:
Many young farmers and farmers sons are presently employed by the mining sector, enabling them to continue to carry on their farming activities, as well as providing a steady source of income during this very difficult time.
A number of witnesses saw mining investment as a potential catalyst for growth in other areas. Mr Drew Wagner from the NT Minerals Council said mine investment could be ‘the catalyst that spurs on a further chain of development’.
Mr Owens from the NT Farmers Association concurred that the presence of a vibrant mining industry tends to lift a region’s capacity in terms of plant and equipment operators and those who can do repairs and maintenance to machinery. He said these workers could then be employed in agriculture and horticulture.
Mr Wagner highlighted the infrastructure and logistics chain improvements that may be brought into remote areas to facilitate mining. He said this benefits agriculture, livestock and tourism.
The Minerals Council of Australia commented that the wider community does not seem to recognise the transferability of METS sector capabilities. It suggested there could be a role for governments in breaking down these misconceptions.
The Greater Whitsunday Alliance Ltd reported that the region has been engaging with the Centre for Defence Industry Capability to promote Mackay/Isaac/Whitsunday METS companies, who ‘already have the capability to match specialist skills and develop innovative solutions for defence sector requirements’. Rockhampton Regional Council also talked about tapping into Defence work.
Mr Lethlean suggested that Rockhampton has ‘a broad-spectrum economy’ and capability to service many sectors, including Defence.
However, the story was not so positive everywhere. The Cessnock City Council identified Singleton as an area with a lack of diversity of industry and an over-reliance on mining. Mayor of Karratha, Councillor Peter Long, stated that there is not enough diversification occurring among Pilbara businesses.
Reliable data on the ability of mining regions to diversify is not necessarily available. Professor Will Rifkin from Newcastle University said he had the sense that some rural resource-dependent communities are doing well, some are doing not so well and some are in between; ‘but there’s not good data’.
Councillor Camilo Blanco, Mayor of Port Hedland, argued that Port Hedland could diversify into downstream processing of lithium ore or other minerals, and that he has been lobbying companies and governments to make this happen. He said:
A $1.2 billion downstream processing plant should be built on Boodarie industrial estate. … This is where we create diversification in our economy, build population, support local business and obviously the local population as well as reduce the extreme social issues that we have in our region.
The Department of Infrastructure, Regional Development and Cities (DIRDC) confirmed that the Government is progressing many projects to diversify regional economies that have a heavy dependence on mining.
DIRDC provided the following examples of Government spending aimed at diversifying these economies:
Signature Onfarm Pty Ltd in Mackay-Isaac-Whitsunday: A $26 million project to construct a greenfield on-farm beef processing facility with accommodation for 70 workers.
Wind and solar farm projects in Collinsville, outside Moranbah, and in Mackay.
Farm to Institution Project in the Central West Region of NSW: Project to develop new markets for small-to-medium food producers to supply local hospitals, universities, aged care and disability homes and schools across the region.
Onslow Marine Support Base in the Pilbara: A $115.5 million project to construct a berth pocket in Beadon Creek to form a landbased wharf facility.
Newman/Marble Bar Road: A $54.5 million project to realign Marble Bar Road through Coongan Gorge.
Asian Renewable Energy Hub (Pilbara): A proposed $20 billion project to build the world’s biggest wind and solar hybrid project to export energy to Asia.
Life after the mine closes
The communities that the Committee visited during the inquiry had mining sectors at various stages of maturity. A significant area of concern was around what happens to ‘mining towns’ and regions when the industry retracts, or shuts down completely.
Cessnock City Council submitted that mine closures could be ‘devastating’ for local communities, leading to high levels of long term unemployment, poverty and social problems, and declining community resources. The Council listed the following socio-economic impacts from post mining:
39.7 per cent of Cessnock’s population earns less than the minimum weekly wage (the NSW figure is 36.1 per cent);
Cessnock has 2,100 jobless families equating to nearly 1 per cent of Australia’s jobless families;
rhe HSC completion rate is 38 per cent (the national rate is 69 per cent);
Cessnock has poor health indicators; and
25 per cent of the working age population is on welfare benefits.
Where communities are highly dependent on mines, the Council submitted, there may be a lack of capacity, experience and ‘entrepreneurial tradition’ required to boost other industries, and members of the community who have the most capacity may be the ‘first to leave’ as the industry shuts down.
Prof Rifkin observed that there may also be fewer young people with a university education, which can inhibit people’s ability to transition to other sectors if the mining sector declines.
Witnesses reported that the Cessnock Council is working to grow other industries, but:
The transition into other industries, particularly from blue collar jobs to service roles can be a challenging and incongruent process. Generational challenges associated with disadvantage and lack of foundation skills can mean some unemployed are harder to place in available jobs.
Cessnock City Council recommended the federal government provide a greater percentage of royalties under the Horizontal Fiscal Equalisation to states or territories with regions negatively impacted by mining withdrawal for the sole purpose of supporting these communities with critical infrastructure to support economic growth.
Councillor Long said the end of the mining construction boom took a serious toll on the Pilbara, as mining companies tried to limit their losses by cutting costs and bringing in foreign labour.
While some communities suffered as a result of the last mining boom and bust cycle, this was not the case everywhere. Mr Jason Russo from the Department of Industry, Innovation and Science referred the Committee to the Productivity Commission’s study into transitioning regional economies, published in 2017.
The study looked at how regional centres adjusted from the ‘boom’ to the ‘bust’, and how resilient and adaptable communities are. Mr Russo reported that the research found major centres are a more adaptable and more diverse than many remote areas.
The report also found that, while regional areas experienced overall employment growth and improved social connections through technology during the mining construction boom;
… some regions have been more directly affected by the pressures of changing economic circumstances and face substantial and perhaps insurmountable challenges in forging a sustainable future.
The Sustainable Minerals Institute at the University of Queensland commented on research that shows regional communities are afraid of a ‘population exodus’ when the mining sector retreats. However, these concerns can be mitigated, the Institute said, by ‘re-orienting local businesses to opportunities for mine rehabilitation and post-mining economic uses of the sites’.
The Committee was interested in the Northern Territory community of Jabiru, which is transitioning from mining to tourism. Mr Wagner explained:
As the mining removes itself from the community and from the environment it’s looking at that furtherment and betterment of the economy, and the opportunity, from the basis of what was originally developed as a mining services facility.
DIRDC explained that the transition of Jabiru is being led by the Department of the Environment and Energy. The lease of the mining company ends in 2020 and the federal government is working with the local community, the Northern Territory government and the mining company to consider options for the town and the environmental clean-up.
Mine site rehabilitation offers opportunities in communities where mining is declining or withdrawing. Roy Hill talked about its rehabilitation program for mines that reach their end of life. These programs are started ‘on day one’, involve traditional owners in the Pilbara and Kimberley regions, and offer future work to communities when mines close.
Dr Bush from the University of Newcastle announced that there is a ‘massive’ global need for companies with the capacity, and people with the skills, to ‘rehabilitate, restore, remediate and re-use land’. He said that the Hunter could be a national and international exporter of knowledge around post-mining land rehabilitation.
The Committee heard examples of private sector legacy programs designed to ease the transition of mining towns and regions. Mr Hawes said the AGL Legacy Fund in Gloucester, New South Wales, was an example of best practice.
The Gloucester Independent Community Legacy Fund involved a $2 million investment by AGL Energy aimed at promoting sustainable economic development, education and employment opportunities in Gloucester. The Fund supported projects like:
a new Long Day Care Service with 14 new jobs;
eight new jobs with a logging company;
funding to expand the premises of a design and manufacturing company and create three new jobs; and
new production facilities for a local engineering firm, and six new jobs.
Mr Greg Lamont from the Association of Mining and Energy Related Councils highlighted a ‘future fund’ model for communities affected by mining withdrawal. He said the approach was demonstrated by the Singleton Council’s use of the Bulga Optimisation Project Voluntary Planning Agreement funds for projects to support the community post mining. The funds were used for improvements to parks and recreational facilities, tree planting, signage and children’s facilities.
Skills and education
The mining industry in Australia is experiencing a ‘silent boom’. This means that the need for skilled and unskilled labour is increasing across many mining regions.
The Committee was concerned to hear that regions such as Rockhampton and Mackay in Queensland, and Kalgoorlie in Western Australia, have significant numbers of vacant jobs and that businesses are struggling to employ staff, especially staff with a trades qualification.
Addressing this problem is not simple. However, the Committee believes that there are a number of actions that industry and governments can take to increase capacity of regional areas to service the mining sector as well as other business sectors in town.
Mining companies and governments must work to dispel the myth that the mining sector in Australia is in decline and that mining careers are unstable.
The Committee strongly suggests mining companies and their large contractors should significantly increase the numbers of apprenticeships and traineeships they offer, as these provide opportunities for local people to join the industry to relieve pressure on the existing businesses trying to train and retain staff.
Towns in mining regions need access to high quality vocational training which is responsive to the needs of industries employing in the region. Local TAFEs must be funded to provide training in the trades required by local industries, including the mining industry. Mining companies should contribute funds towards this training, offer industry work placements, and provide job opportunities for successful graduates.
State and federal governments must ensure adequate funding for regional TAFEs and prioritise the teaching of the trades most in demand.
The Committee recognises Australia’s high quality mining-related university centres, including the Western Australian School of Mines, University of New South Wales School of Minerals and Energy Resources Engineering, University of Adelaide School of Civil, Environmental & Mining Engineering and University of Queensland School of Mechanical & Mining Engineering, which educate future leaders in the sector.
Initiatives like the tertiary knowledge hub in Muswellbrook, opened by Newcastle University in partnership with TAFE, are an inspiration and an example of best practice approaches to integrating mining-related education into communities.
The Committee would like to see more collaboration between the tertiary and vocational sectors to make education more accessible for young people from regional areas, and to provide courses that are both practical and technical to meet the demands of the industry.
Clustering in the METS sector
The METS sector in Australia is a critical employer now and into the future. Governments at all levels must invest in empowering Australian METS businesses and helping them to thrive.
The Committee was convinced by evidence that ‘clustering’ initiatives offer an effective way to build the sector, increase its capacity, and open up avenues for further commercialisation and export of Australian METS technologies.
The Committee would like to see governments focus their METS investments in regional areas, with the aim of creating centres of innovation and excellence in mining towns.
In addition, the mining industry should harness opportunities to build METS capabilities in regional areas. One way to do this would be to ensure that, as the mining sector becomes increasingly automated, Remote Operating Centres and other facilities that support automation are based in regional locations, rather than major metropolitan areas far from the mines.
Diversification and sustainability
Mines can provide opportunities and wealth to the communities near to them. However, without proper planning, any gains can be quickly lost when mining retreats.
Governments at all levels must work to ensure communities do not become solely dependent on mining at the expense of other sources of economic activity. Such communities experience terrible hardships when mines close.
Mining companies have a responsibility to set aside funds and create plans for community sustainability post-mining. These plans must form part of mining company agreements with local and state governments.
The Committee notes the current federal government investments focussed on diversifying mining regions, including into areas of agricultural processing and renewable energies. These investments must continue and further investments should be considered for the communities most dependent on mining.
The Committee also suggests governments could support local communities in advocating for down-stream resource processing industries to be developed in regional towns. For instance, the Committee notes Port Hedland Council’s bid to secure a facility for the processing of lithium ore in the region.
The Committee recommends the Federal Government work through the Council of Australian Governments (COAG) Industry and Skills Council to develop a plan to increase the availability and accessibility of mining-related trades training, and mining-related tertiary courses, in mining regions. Such training should be:
Developed in consultation with mining and other local industries to ensure the right skills are being taught;
Funded and promoted jointly by government and industry;
Affordable and accessible to local young people in mining regions;
Available through online learning wherever appropriate; and
Connected to industry, with specific job opportunities attached to successful completion of training.
The Committee recommends the Federal Government work with state, territory and local governments and land councils who make licensing agreements with companies to ensure these agreements include a requirement for companies to invest in skills training, provide minimum numbers of apprenticeships and traineeships, including Indigenous opportunities, and report on these investments. Levels of investment required should be based on the specific circumstances of the region and the project.
The Committee recommends the Federal Government partner with the mining sector to promote careers in mining, and mining equipment, technology and services (METS). Initiatives should:
Be aimed at recruiting workers for the industry from the towns and regions closest to the mines;
Incorporate promotion aimed at recruiting tradespeople and apprentices, as well as engineers and other tertiary-qualified professionals;
Work to challenge the perception that the mining industry is in decline, or that a career in mining is unstable;
Promote the Western Australian School of Mines and other mining specialist tertiary education centres; and
Promote the industry as being at the cutting-edge of technology and innovation.
The Committee recommends the Federal Government partner with relevant state, territory and local governments and land councils to develop localised plans to increase capacity and skills in mine site rehabilitation and post-mining clean-up within mining regions.
The Committee recommends the Federal Government provide support to assist local governments and land councils to advocate for downstream resources processing industries to be developed in regional locations.
The Committee recommends the Federal Government continue to fund initiatives promoting innovation and commercialisation in the mining equipment, technology and services (METS) sector. Specifically, the Australian government should direct more funding towards ‘clustering’ initiatives, especially those located in mining regions and involving local businesses and organisations.
The Committee recommends the Federal Government partner with state, territory and local governments to provide incentives to mining and resources companies to develop Remote Operating Centres in regional towns close to mining operations, rather than in metropolitan areas.
The Committee recommends the Federal Government work with relevant state, territory and local governments, land councils, resource companies and community groups to establish well-funded, region-specific resilience and sustainability plans to help mining-dominated regions diversify and thrive in the long-term.