Employment outcomes from previous transitions
Evidence from various industries that have undertaken transition in Australia over the last few decades indicates that only around a third of displaced workers find full-time stable employment. Another third of displaced workers find work in less secure casual or part-time roles, while the remainder do not work again (some of which is due to retirement).
In this regard, The Next Economy noted that:
Australia does not have a good track record of managing structural adjustment processes, and studies from outcomes from the demise of other industries such as car manufacturing, textiles and the logging industry have repeatedly shown that if support for workers and regions comes after closure, only a third of workers find full-time work at a similar pay rate, a third find casual or part-time work and a third remain unemployed.
The Institute for Sustainable Futures cited evidence presented to the Victorian Parliament on the Latrobe Valley transition on the outcomes for affected workers. Dr Chris Briggs told the committee that 'not withstanding all of the resources that are going in there and what looks to be a very promising model, two years later, one in three are still unemployed'.
Similarly, even with the long lead time and intensive support provided to employees by the companies themselves and government prior to the closure of the Australian car manufacturing sector in 2017, the employment outcomes of displaced workers has not changed significantly. One year on from the closure of car manufacturing in Australia, 36.9 per cent of affected workers have found full time employment, 32.8 per cent of workers have found casual or part-time work and 30.3 per cent of workers are either unemployed or not in the labour market.
Only about half of the original estimated job losses from the closure of car manufacturing eventuated as many supply chain businesses were able to adapt. If forward notice of the closures had not been conveyed early, it is likely that employment outcomes following the closure of this industry could have been much worse.
The results of Australia's transition outcomes contrast starkly with that of Germany. The Next Economy submitted that:
To avoid such dismal prospects, lessons can be learned from Germany, where government, industry and unions have been working together far in advance of any closures to manage the transition from coal to renewable energy.
In Germany, offering workers the opportunity to redeploy to other plants or into renewable energy projects, or retire early has enabled an orderly reduction from 130 300 coal mining jobs in 1990 to around 12 100 in 2014, with the last black coal mine closing at the end of 2018 with no forced redundancies.
Important factors for a successful transition
In order to avoid outcomes similar to previous transitions, stakeholders consistently emphasised that new industries and associated jobs do not materialise through market forces alone.
Professor Ray Wills from Future Smart Strategies succinctly summarised the speed of transitions and the role of planning:
Transitions don't happen overnight; they have to be planned, they have got to be executed and they have got to be delivered—and that's years, not days.
Modern economies require a different lens and new tools to remain competitive and resilient. Regional economies and communities will be impacted in the absence of robust transition planning:
The La Trobe Valley example, where closure and diversification planning occurred at the time of/after coal-fired power plant decommissioning, provides a vivid reminder of the importance of planning and the impact failure to do so has on families.
The Centre for Policy Futures contended that structural change:
…requires careful, long-term investment from governments (federal, state/territory and local) that enables the right conditions for market forces to work:
Connected supply chains and physical and digital infrastructure must support new or expanded industry opportunities and meet the demands of new or expanded markets and consumer expectations;
Labour markets must be appropriately skilled and accessible as to meet new demand, with regional education offerings (tertiary and vocational) flexible and accessible to local workforces;
Policy and regulatory frameworks must be fit-for-purpose to support new economic opportunities while simultaneously protecting social, environmental and cultural values; and
Firms must be given the right financial conditions to risk new economic opportunities and 'brave' the international trading system.
As outlined below, the following factors from previous transitions both internationally and domestically were identified as important:
collaboration and capacity building
long term planning which identifies and works towards transition
fostering key projects to build successful transitions.
Collaboration and capacity building
Dr Michael Askew from the Monash Sustainable Development Institute argued that with the knowledge of what opportunities are available for regional areas:
…we need to create planning frameworks, create the right investment settings, start looking at these scenarios, start planning and start using universities that are sitting here with this knowledge about how to develop scenarios, to work with government and industry—as they are in Europe. It’s about creating those collaborative frameworks.
But each region's differences need to be taken into account. The Centre for Policy Futures submitted that 'Planning for change requires careful, long-term investment and an approach that is guided by the peculiarities of each region'.
Similarly, Professor Hurriyet Babacan from the Rural Economies Centre of Excellence argued for regional workforce planning to identify place-based opportunities.
The AMWU noted that a 'one-size-fits' all strategy is not appropriate:
Key to [our] submission is that not one of these opportunities is the solution for all communities. Whether it be in the manufacturing of rail rolling stock, defence equipment, food manufacturing or renewable energy generation, industry planning must be diverse, able to stand on its own two feet and tailored to fit regional communities.
Importantly, a number of stakeholders emphasised the need to bring the affected community along throughout the process. In the context of thermal coal mining communities, Professor Karen Hussey from the Centre for Policy Futures argued that:
…if you have a community that, at the moment, is heavily dependent on thermal coal mining, then I think it is everybody's responsibility to sit down with that community and do everything they can to, first of all, impress upon that community that, never mind what the federal government does in Australia, the rest of the world is making decisions in the coming decades that put them in a vulnerable position.
Mr Kane Thornton from the Clean Energy Council provided a succinct summary of the benefits that can come from collaboration:
People need to think about it well ahead of time and be prepared to come together, collaborate and cooperate to make that happen. I think that has been a missing part of the puzzle to date.
Councillor Sarah Stanley from the Shire of Collie outlined the concept of the collaborative 'quadruple helix' following a visit to the Latrobe Valley:
One of the big things we got from that visit was that they took a lot of their ideas from the European Commission and the way they do regional development—which is apparently quite good. It was around that real consultative process—what they call the quadruple helix—ensuring that, whatever topic you are talking about, you have community, industry, education and government in the room. Who the representatives are may be different in any case. So you don't always just go to someone like me and ask what the community's opinion is; you want to ask the people from the community area about that particular topic—because who the community is, who the industry is, who the education representatives are and who the government representatives are will change from time to time.
A similar collaborative concept was discussed by representatives of the City of Newcastle.
The Monash Sustainable Development Institute (MSDI) argued that:
Regional economic growth is founded on the capacities and skills of individual stakeholders and the ability of these stakeholders to collectively drive system-wide change. Successful regions have built capacities through targeted transition training and skills development, and build coalitions of industry, government, community, and research and training entities to deliver the agenda for regional economic and social transition. These coalitions provide overarching governance, platforms for technology integration, experimentation and, importantly, coordinating functions in the reskilling, redeployment and growth of regional workforces.
The National Centre for Vocational Education and Research (NCVER) outlined the five elements of effective partnerships based on their analysis of previous transitions:
a common agenda—a shared vision and understanding of the key challenges and agreed actions
shared measurement systems—with transparent key performance indicators and accessible data to track progress
mutually reinforcing activities—including space for different activities coordinated through a shared action plan
continuous communication—which aspires to being consistent, open communication and builds trust between organisations and with the displaced workers
governance structures—to include an independent entity with staff possessing the appropriate skills to coordinate the participating organisations and to support implementation actions to assist displaced workers.
Long-term planning that identifies and works towards transition
The committee also heard it can take much longer than four years to plan and execute a transformation plan. The President of the Shire of Collie noted that larger projects can take over a decade to go from concept to reality:
In particular, the larger job-creating projects take a decade to get to the point where they turn sod. That's why we're starting today, even though the impacts of Muja [Power Station closing some of its coal fired electricity generators] are not expected to really start hitting for 10 years.
Given the state owned power generator is closing some of its coal fired electricity generators in Collie, it is unsurprising that the Western Australian government is investing heavily in the transition for that region. As such, the move to diversify the economy and plan for the future is already well underway. The state government has established a number of Collie specific investment funding programs:
$60 million for industry attraction and development of large-scale initiatives to promote economic diversity
$18 million Collie Futures Fund for grants up to $2 million for small and medium enterprises to grow and diversify the local economy
$2 million Collie Futures Small Grants Program.
The state government has also established a dedicated Collie development unit, in addition to the South West Development Commission and other local advisory groups, which is:
…charged with working with the community here in Collie to attract that investment and industry through leveraging that $80 million funding contribution. That team, in consultation with the communities, is responsible for development of worker transition planning and the establishment of a one-stop shop for workers, industry and small businesses, so that they can work together, in partnership, to further the future of this community.
This transition process has involved collaboration between the state and local government, business groups and the community. Ms Julie Hillier from the Collie Chamber of Commerce and Industry commented about the process:
…it's co-designing—not coming in and consulting but truly co-designing, co-leading. I noted in one of the submissions the statement 'the need for a public authority to manage the transition'. I think there's a big difference between management and leadership, and we want community leadership and community co-design, delivery and facilitation of anything, any template and any blueprint, that is designed, moving forward.
And this view was supported by the WA Government's South West Development Commission:
It is imperative that they have that self-determination for their community. So I don't envisage doing things to this community. We've got to work with them and make sure that they very much feel like they are driving their community in the future.
The committee heard in Collie that collaboration works much better without politicisation or posturing:
If we get the capability and the resilience built locally—and we're working closely with higher education and researchers so it's evidence based; we're working with government agencies; we're working with local stakeholder groups; and we're working with the community—and if we can get over artificial boundaries and, as I say, politicising or posturing, and just get on and do what we need to do as a community, then I think we've got a high chance of success.
Planning doesn't have to require the involvement of government. Mr Adrian Price from the Ai Group Hunter Region provided examples from Pittsburgh in the United States and in Germany where transition planning had been driven without government intervention.
Indeed, The Next Economy explained why the German example of transition planning is so often cited:
I guess that why the German example gets cited is that one of the things they did well, and which would be applicable to here, would be that they did long-term planning. They started in the mid-nineties. They didn't just leave it up to government. Apparently this is a thing across all policy development in Germany: it was seen as the responsibility of government, industry and workers. They got together and took joint responsibility for that plan. That meant they could do industry-wide sector planning. That would still be applicable in Australia, even with our geography, in terms of thinking about infrastructure, supply chains and the transportation infrastructure that is needed.
In supporting the development of new 'green' industries, the Monash Sustainable Development Institute argued that:
Jobs growth in regional Australia will be driven by renewables and storage, bio-innovation, circular economies, environmental remediation and sustainable food systems. The extent to which we are successful in driving this growth and ensuring it works for communities is contingent on capacity and coalition building, unlocking investment, getting our planning frameworks right, and moving from concept to development.
But the committee was also told that planning needs to be supplemented with action. As the Port of Newcastle described in relation to the BHP steelworks transition 20 years ago:
The important thing we took away from that period was that, whilst BHP had advised that it would be doing those actions some decades before it happened and plans were being developed throughout the period, the transition and the plans themselves were never implemented.
The MSDI advocated for a 'Vision-Scenarios-Pathways' approach to long-term planning:
‘Visioning’ establishes a unifying framework for regional transformation and provides policy makers with the concepts and cases to advance the vision with regional stakeholders. ‘Scenarios and Pathways Planning’ establishes specific scenarios of what the region will look like into the future and designs transitions pathways to get there.
This ‘Vision-Scenarios-Pathway’ approach has been fundamental to all the successful regions we have studied and has enabled decision makers to ‘lead from the future’ – goals and future regional settings are crafted in consultation with stakeholders and experts, which creates ‘pull’ factors for action on new jobs and business innovation.
And the MSDI provided an example from Rotterdam where new technological and social system innovations have driven strong regional employment growth:
As we were told on our first visit to the region: 'securing future employment is simple really – just model what the future industrial landscape will look like including what skills will be required, assess your current skills, and then close the gap'.
Fostering key projects to build successful transitions
The MSDI argued that successful transition regions have targeted both catalyst and magnet projects. Catalyst projects accelerate the development of new industries while magnet projects attract additional investment in the region. These projects mobilise world-class research and development around sustainable technologies, processes and industries.
According to the MSDI, catalyst and magnet projects:
…foster the creation of special activation precincts and innovation hotbeds that provide opportunities for upscaling concepts, piloting technologies, commercialising ventures, and testing and assessing established projects. In doing so, these projects activate and deploy workforce innovations that reinforce innovation and ensure that new developments quickly move from the concept stage to the development stage.
Similarly, the Institute for Sustainable Futures advocated for the development of clusters with complementary linkages between industries which, in turn, reinforce each other.
In each of the region areas that the committee visited, stakeholders readily identified industries which could be a suitable pivot for economic diversification and regional transition:
Townsville—battery manufacturing and cyber security and ICT
Mackay—biofuels and public sector
Whyalla—new steel works and renewables
Collie—ore processing, battery manufacturing and heavy industry
Newcastle—hydrogen exports, diversified port and supply chains, land remediation, and heavy metal recycling.
The need for a national transition authority
A range of stakeholders supported the establishment of a national transition authority in one form or another. The primary objective of any transition authority is to successfully realise the key factors of planning, collaboration and identifying a way forward.
The Next Economy considered that a national transition authority could have the following responsibilities:
overseeing funding and coordination of transition planning at both a national and regional level
coordinating with other authorities and government agencies to ensure that the scale, type and pace of the transition will enable us to meet international climate obligations to reduce emissions
coordinating an industry-wide, multi-employer redeployment scheme to provide retrenched workers with the opportunity to transfer to other power generators
ensuring companies meet their responsibilities to workers in terms of redundancy payments and entitlements, retraining opportunities, and generating jobs through full decommissioning and rehabilitation of sites.
The Centre for Policy Futures was supportive if such an authority could oversee transition planning, working collaboratively with state/territory and local governments—and regional authorities—and with input from stakeholders across business, peak bodies, unions and education providers.
The Regional Australia Institute saw any transition authority as:
…being a facilitator, a connector and a source of knowledge that is continually being updated because it is supported to be updated and to go where others have not been able to in obtaining the data and information that you need to effect the appropriate evaluation. Therefore, through that evaluation and learning, you could have the opportunity to effect further change.
Professor Karen Hussey from the Centre for Policy Futures outlined the need for one agency to oversee and steer transition planning at a national level:
At the end of the day, somebody in government needs to do the steering, and I've written those standard points to say to you that, in steering successfully, the government, whether it's state or federal, needs to actually have an entity within the bureaucracy for whom this is their main job.
That, frankly, folks, is perhaps the hardest part of this from a governance perspective, because there are at least six, seven or eight different parts of the bureaucracy that will see this as being core business for them. You've got to pick one, because otherwise you end up with a multitude of transition related programs being rolled out from different departments…
However, many stakeholders argued that establishing a national transition authority would not replace the need for local transition planning bodies. Indeed, Dr Amanda Cahill from The Next Economy, echoing many participants, considered that 'it is not either/or, it's got to be both'.
The Centre for Policy Futures strongly advocated for placed-based strategies led from the local level to drive any transition process:
Community consultation is fundamental to guiding the transition but it requires planning and investment to ensure community members are included and valued through the process. Indeed, it is arguable that communities need to own and lead the transition, with governments providing a 'steering' role but not leading a leading role.
The Regional Australia Institute argued that:
It's taking a really holistic approach, but a place based approach, so that the community themselves—we talk a lot about regional Australia really planning for their future workforce themselves because they need to be in charge of their destiny and futureproof their own regions. The only way to do that from a jobs perspective is to work hand-in-hand with the regions that currently exist, or the industries that may exist that you may be able to create in your region, to create a blueprint and try to match those skills and jobs with the people that are in the community.
The Next Economy noted that diversity of Australia's regions needs to be accounted for:
And that's why a region led planning process is so important. It needs to be facilitated at a national level in terms of a framework and the resources to support that, but each region is going to be different in terms of opportunities.
While noting that the case for a national transition authority is compelling and can assist in coordination, the MSDI argued for locally-based, independent regional planning coalitions which are more likely to avoid political and bureaucratic capture. Local organisation can retain a focus on the frontiers of practice and pull more organisations towards them through the transition process.
Collation of existing information regarding regional transition
Irrespective of the establishment of a national transition authority, some stakeholders advocated for investment in a consolidated knowledge base.
Ms Liz Ritchie from the Regional Australia Institute highlighted the lack of information about regional transitions:
What has been enlightening to us is the lack of information. I guess what I would call for—I know it's in the parameters of this inquiry—is looking for an independent transition body.
The Centre for Policy Futures noted that much extensive and relevant research has yet to be translated into a fashion that is supportive of policy development:
The University of Melbourne has developed materials describing the relevance of that strategy to Australia, and we commend the ‘State of the Art Review’…to the Committee. Similarly, the work done by the Regional Development Institute and the Rural Economics Centre of Excellence have particular bearing on the Committee’s program of work, as do the various other research-focused entities funded by the Commonwealth and state/territory innovation budgets (Cooperative Research Centre (CRC) for Developing Northern Australia; CRC for Low Carbon Living; Blue Economy CRC etc.).
Professor Karen Hussey for Centre for Policy Futures also emphasised this point:
…a tremendous amount of relevant, pertinent research that's been done across our innovation, science and research landscape that I just don't think is being drawn on enough. One of your recommendations could easily be to synthesise some of that work—particularly, I'm thinking, out of the CRCs—in a way that looks particularly at transition planning. That's a job that any number of people could do and do quite ably.
A number of organisations indicated a willingness to be part of an initiative that collated information regarding regional transitions.