Issue 04 February 2015

ICT & RESOURCESINDUSTRY BRIEFINGS

ENGINEERING CHANGE: BETTER INFRASTRUCTURE

WHAT’S AHEAD FOR SCIENCE IN 2015?

INFRASTRUCTURE

SCIENCE

Publishing Details

Professionals Australia (registered as the Association of Professional Engineers, Scientists and Managers Australia).

GPO Box 1271, Melbourne, 3001. Level 1, 163 Eastern Rd, South Melbourne, VIC 3205. Telephone: 1300 273 762 Email: info@professionalsaustralia.org.au Web: professionalsaustralia.org.au

Professionals Australia Board of Management

President Bill JacksonSenior Vice President Andrew RussackVice President Maria FuchsVice President Col HackneyVice President Greg McMahonSecretary Robyn PorterTreasurer Olaf ReinholdChief Executive Officer Chris Walton

Professional Edge

Professional Edge is published by Professionals Australia.Editorial contributions and feedback welcome. Contact marketing@professionalaustralia.org.auResponsibility for electoral comment is taken by Chris Walton, 163 Eastern Rd, South Melbourne, VIC 3205.The pages of Professional Edge are open to contributions from all members and from other sources. Comment in these pages does not necessarily reflect the opinions or polices of Professionals Australia or its officers.

Creative Commons Licence

The text of Professional Edge, being the magazine, is licensed under Creative Commons. The images cannot be republished without prior permission. www.creativecommons.org

Contents

1312

RPEng a continued success

ICT and Resources Industry Briefing

Editorial - Engineering success

Better Infrastructure

What’s ahead for science in 2015?

‘Still the Clever Country?’ launch

Latest news

RPEng a continued success

Industry briefing: ICT

Industry briefing: Resources

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9

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Cover photo:

Professionals Australia National President, Bill Jackson signed the first RPEng testamur almost 12 months ago.

This particular testamur was for former National President and now Chair of the RPEng Assessment Committee, Dario Tomat.

Read more about the continued success of RPEng on page 10 or visit www.rpeng.org.au.

9

What’s ahead for science in 2015?

The waste equation

There’s waste because of lack of engineers in government

Experts estimate waste at between 6.5 and 12.7 % of project cost

Government forecasts $125bn spend in next decade on infrastructure

6.5% — 12.7% x

$125 billion

$8 billion — $16 billion Waste over the decade

6Professionals Australia calls for Better Infrastructure to stop the waste

Professionals Australia4

Opening

Commitments by the now Victorian Government demonstrate that campaigns we run can make a huge difference to professionals, and importantly, our members..

The new Victorian Government has committed to de-politicising the planning and development of infrastructure by establishing Infrastructure Victoria and committed to best practice in procurement and delivery of projects by establishing Projects Victoria.

They have also committed to enhancing the status of the engineering profession by appointing a Chief Engineer and establishing a registration scheme for engineers to protect the integrity of the profession.

The campaign to achieve these policy reforms started some years ago. Our Victorian Engineering Subdivision enlisted the help of members to demonstrate through the media and in meetings how the delivery of infrastructure in the state was failing the public. We added weight to those efforts by petitioning parliament, meeting with Ministers and their Shadows and gained concrete commitments in the run up to the election.

After the election, the new Premier and Treasurer met with us to assure us that they would act on their commitments made in Opposition. While we’re not politically aligned, we work with both sides of politics because our member’s lives are affected by what governments decide. We’ve taken learnings from our past advocacy efforts and refined and improved them.

Our new policy document, ‘Better Infrastructure’ harnesses our experience and the views of members. It represents not just a campaign, but it is the dialogue we will have with politicians, industry and stakeholders across Australia in coming months. Every Australian Member of Parliament has received a copy of the document, and we will be directly advocating our case as often as possible.

There’s a summary of the document later in this magazine, and a number of ways you can help us to bring about change and make sure that governments invest in engineers and value the vital contribution the profession makes to society.

Chris Walton, CEO Bill Jackson, President

Professionals Australia National President, Bill Jackson and CEO, Chris Walton hold the first signed Registered Professional Engineer (RPEng) testamur.

THE PRACTICAL MARK OF QUALITYIN ENGINEERING

Get your respect today. Get registered now. rpeng@professionalsaustralia.org.au www.RPEng.org.au

Registered Professional Engineers of Professionals Australia (RPEng) is a new, high-quality, affordable engineer registration scheme.

Get Registered.Get Respect.

RPEng is the highest qualityRPEng is affordableRPEng is user-friendly and streamlined

Engineers deserve greater respect, recognition and reward.

Professionals Australia believes that unless urgent action is taken to improve their management of infrastructure delivery, we will watch governments continue to waste billions of taxpayers’ money over coming years.

There’s widespread agreement that Governments now lack the necessary internal engineering and technical expertise for procurement. Independent experts estimate that waste due to this failure will amount to up to $16 billion over the next decade.

Government doesn’t value the work of their own engineers yet places a premium on getting infrastructure delivered. This crazy situation means that the private sector now deals with a difficult client in government. Even the key beneficiaries of outsourcing are ringing the bell on waste.

What we now have is signs that government is listening and taking action. The Victorian Government responded to our campaign with a comprehensive policy document, released well before the election. Identifying the problem, harnessing the skills and expertise of members and having a thoroughly well researched policy position are the key to getting results.

Better Infrastructure is an evidence-based, planned campaign which is calling for five actions:

Better Infrastructure

Engineers

As the campaign continues to gain momentum, there will be a number of opportunities for supporters to get involved and have a greater impact on engineering real, tangible, change.

If you think you might be a position to assist, we’d love to know how. The greater the member involvement, the more politicians will listen. Below are some actions which we will call on supporters to participate in:

• Share social media updates.• Send one email asking a colleague to register their interest.• Leave copies of Better Infrastructure at your workplace.• Email an MP or Minister.• Tell us (confidentially) of your experience with poor infrastructure.• Be part of delegation of engineers to meet with an MP.

We want to make your involvement as seamless, but as effective, as possible. You’ll be hearing more from us in coming months as the campaign builds momentum in States and Territories across the Commonwealth.

http://www.professionalsaustralia.org.au/advocacy/campaigns/better-infrastructure/

betterinfrastructure@professionalsaustralia.org.au

Better Infrastructure campaign is an evidence-based, planned campaign which is calling for five actions:

5

4

3

2

1 Bring the engineering profession together to provide expert advice on what the profession needs.

Rebuild engineering expertise in government and make sure we’re delivering infrastructure well.

Make sure that companies building infrastructure invest back into the engineering profession.

Lift the status of the engineering profession and act to ensure its quality and integrity.

Lock in funding and reduce the influence of politics on infrastructure by recognising and listening to the advice of engineers.

Engineers

$8 billion could build:

SIXTY SCHOOLS

THE NS W

M1–M2LINK

THE FIRST ST AGE OF THE

WESTCONNEXROAD

SYDNEY

LIGHT RAIL

FOUR SUBMARINES

THE MELBOURNE

THREE HOSPITALS

Professionals Australia believes that unless urgent action is taken to improve the management of infrastructure delivery, we will watch governments continue to waste billions of taxpayers’ money over coming years.

6 7

http://www.professionalsaustralia.org.au/advocacy/campaigns/better-infrastructure/

betterinfrastructure@professionalsaustralia.org.au

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The Government’s Working Group on Funding Research Infrastructure reports back in May (post-Budget) and the Higher Education Infrastructure Working Group - which is looking at new ways to fund general university infrastructure - reports back in August. Following the extra $150 million found to keep the. National Collaborative Research Infrastructure Strategy going in 2014 and expiring in 2016, we may also get some understanding of how the strategy will be funded into the future. The scale of the Medical Research Future Fund is unclear given the uncertainty around hypothecated funds from GP co-payments.

The Abbott Government’s Inquiry into Australia’s Innovation System also reports back in early August - just in time for Science Week which this year runs from 15-23 August.

Industry Minister Ian Macfarlane now has Science formally included as part of his title and the PM’s Commonwealth Science Council is in place. At the same time though, Professor Ian Chubb’s tenure as Chief Scientist expires at the end of May.

In this context of uncertainty, it’s more important than ever that we advocate for the importance of science in building a modern Australia. Professional Scientists Australia will launch its Still the Clever Country Campaign on March 3 in Canberra.

‘Still the Clever Country?’ is Professional Scientists Australia’s (PSA) new campaign to advocate for the value of science, innovation and R&D in Australia.

The keynote speaker for this event will be Chief Scientist, Professor Ian Chubb, AC.

Date: 3 March 2015Time: 9:30AM to 11:30AMVenue: Jaeger Room, Shine Dome, Australian

Academy of SciencesAddress: 1 Gordon St, Canberra.

Spaces are limited, so register your interest in attending now by e-mailing scientists@professionalsaustralia.org.au

‘Still the Clever Country?’ launch

Scientists

The National Innovation and Competitiveness Agenda has been released with priority Industry Growth Centres identified and a strong focus on maximising collaboration between industry and the research sector and growing commercial returns from research. The CRC Program Review reports back in early 2015 with recommendations arising from that as well as the input to the Boosting Commercial Returns from Research Consultation likely to be reflected in the May Budget.

While getting science and industry working more closely together and creating incentives for commercialisation provide the potential for significant economic returns and jobs, it’s critical that Government maintains a balance between commercialisation incentives and other performance indicators to protect the integrity of our university system. It’s also important that while the Government focuses on maximising linkages between industry and researchers and incentivising applied/industry-driven research, it’s not at the expense of publicly-funded blue skies/curiosity-driven research which can yield unanticipated commercial savings and gains.

Changes to education remain central to the Abbott Government’s policy agenda with the most recent development being the delay of the more controversial elements of its higher education reforms to secure support from Senate cross-benchers to allow fee deregulation.

Figures released by Universities Australia show that the cuts to funding in the form of fee deregulation announced in the Budget are likely to result in an increase in tuition fees for Science, Technology, Engineering and Mathematics (STEM) students of 58 per cent. This compares to an average increase in tuition fees across disciplines of around 26 per cent. It is of course a major concern that the proposed changes may act as a disincentive to future STEM students – and a possible threat to ensuring a strong pipeline of scientists to form the basis of our STEM workforce. A committed, coordinated and strategic approach to investing in and incentivising STEM education is critical for Australia as we look to our future as a modern knowledge-based economy.

These proposed changes sit alongside a likely revamp of the Higher Education Block Grant Scheme to realign it with the push for greater industry/research sector collaboration.

What’s ahead for Science in 2015?

“A committed, coordinated and strategic approach to investing in and incentivising STEM education is critical for Australia as we look to our future as a modern knowledge-based economy.”

There is little doubt that 2015 is going to be an interesting year for Science

9

Professionals Australia has welcomed Ford Australia’s plan to invest $300m into creating its Asia-Pacific Engineering Centre campus at Broadmeadows, as a great step towards building a strong future for automotive engineering at the company, and in Australia.

CEO Chris Walton said “This is great news for automotive engineering, great news for our economy and great news for the future of innovation and new technologies in Australia”.

Ford will invest $300 million this year, to redevelop the Broadmeadows site to focus entirely on engineering and product development. Once completed Ford’s Asia-Pacfic Engineering campus, will house around 1500 engineers and technical staff working across research, development and design.

Professionals Australia has long argued with government and manufacturers that the advanced engineering and design work associated with car manufacturing could be done anywhere in the world, and that our engineers were among the best in the world.

“Ford has recognised that there is a very real opportunity to capitalise on the research and innovation capacity of Australia’s world-renowned automotive engineers – and develop cars and technologies for the world.

There are around 2,000 automotive engineers in Australia. Ford Australia is set to become the biggest employer of automotive engineers by 2017.

Professionals Australia has responded to the energy regulator’s draft determinations which recommended cuts to revenues for Actew AGL, Ausgrid, Endeavour Energy, Essential Energy and Transgrid.

The Australian Energy Regulator (AER) “regulates energy markets and networks under national energy market legislation and rules” and is the key body “for setting the prices charged for using energy networks to transport energy to customers”, which they have recommended be substantially reduced.

Professionals Australia represents thousands of members in the energy sector and has advocated strongly on their behalf that the proposed reductions in revenues for the suppliers will necessarily impact on safety, reliability and professional capabilities across the sector.

Latest NewsProfessionals Australia welcomes Ford’s Asia-Pacific Engineering hub

Professionals Australia responds to Energy Regulator

Latest News

Some highlights of the submission are that Professionals Australia believes that the draft determination:

• fails to provide enough funding for business to meet safetyrequirements consistent with their legislated requirements;

• jeopardizes the security of energy supply in the ACT and NSWand increases risks to safety;

• has been formulated without adequate consultationwith professional engineers, industry, allied stakeholdersand experts;

• contains proposed cuts to funding which would see animmediate loss of engineering capacity, who are key inbuilding efficiencies and improvements;

• would have wider impacts on the economy and community;• needs to account for a period of transition towards any

program of change that the AER is wishing to implement;• provides no ability to fund enterprise agreements in

the suppliers.

Professionals Australia has engaged with affected suppliers, members and stakeholders to build pressure on the AER to make their final determination one which properly accounts for the concerns detailed above.

A complete copy of the submission is at: www.professionalsaustralia.org.au/advocacy/submissions

A Professionals Australia member and pioneers in vital medical research lead a field of more than 600 high-achievers named in the 2015 Australia Day Honours list.

Professionals Australia CEO Chris Walton said that the accolades were extremely well deserved and important to the broader professions of science and engineering.

“Professionals Australia congratulates our esteemed member Barry Tonkin, who received the Order of Australia medal for his contribution to engineering, professional bodies and the community.

This year’s medical research was at the forefront in the 2015 Australia Day honours, with three leading scientists among the five people to receive the nation’s highest accolade.

Kidney transplantation expert Professor Jeremy Chapman (malaria specialist) Professor Brendan Crabb (glandular conditions researcher) and Professor John Funder were each appointed Companion (AC) of the Order of Australia.

Professionals Australia CEO Chris Walton said that the focus on medical research showed how important science and research is to Australia’s future.

Medical researchers and a Professionals Australia member receive Australia Day honours

10 Latest News

Professionals Australia has joined calls for a Senate inquiry into the skilled migration system, after a Department of Immigration and Border Protection review showed the number of temporary visa holders has increased significantly.

Professionals Australia CEO Chris Walton said that the Department’s review of the skilled migration system had ignored the impact that the growing number of foreign workers on temporary visas, was having on Australia’s job market at a critical time in the transition of our economy.

“The report outlines that the number of 457 visa nominations in engineering fell by 46 per cent since labour market testing was introduced in 2014. Yet much more needs to be done.

In May, Professionals Australia wrote to Minister for Immigration Scott Morrison to request engineering be temporarily removed from the Skills Occupation List.

Mr Walton said that in the last year, there had been around 7,000 engineering job losses as a result of the hiatus in the resources sector, closure announcements in the automotive and manufacturing sectors and public sector job cuts.

Mr Walton said that Australians want to see a plan for economic growth that will create good jobs with decent wages and strong investment in skills and training – not a plan to make it easier for companies to bypass Australian workers, university graduates and professionals.

“Australia needs a skilled migration system that focuses on strengthening the requirements for employers to advertise jobs locally before recruiting workers from overseas. We need a Senate inquiry that can investigate fully the best way forward, said Mr Walton.

Professionals Australia has welcomed an announcement from the South Australian Government to establish Australia’s first aerospace cluster in Adelaide.

Professionals Australia’s CEO Chris Walton said that the Australian Aerospace Alliance would develop stronger ties and partnerships between the state’s defence and commercial aerospace sectors that would attract investment and interest from other parts of Australia and the world.

“Australia is already a leader in aerospace innovation. This new aerospace hub will ensure our local industries are well-placed to deliver highly competitive, innovative and value-added solutions that meet the needs of commercial and defence organisations.

“For aerospace engineers, this project will create more opportunities certainly. But perhaps more importantly it will deliver South Australia more high-skilled jobs, and a stronger economy – which is good for everyone.

Mr Walton said, “It is estimated that during the next 20 years, one third of the total estimated 33,500 new wide-body passenger aircraft – worth around $4 trillion – will be delivered in the Asia Pacific region.

Senate Inquiry into skilled migration needed

Professionals Australia welcomes aerospace hub for Adelaide

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11

2015 will be a defining year for engineering registration in Australia

Registered Professional Engineer (RPEng)

The Professionals Australia Registered Professional Engineer (RPEng) scheme was developed to provide professional engineers with an affordable and high-quality registration system so they receive the respect, recognition and reward they deserve.

Professional engineers perform vital work that supports the prosperity and safety of our nation. They apply high levels of knowledge and skills to solve complex challenges, build the products we use and the environment we live in.

They deserve the increased status that accreditation provides, while the community deserves to have confidence in the engineering services they procure.

Professionals Australia believes that just as registration of medical doctors provides patients with peace of mind; registration of professional engineers ensures safety and provides confidence to communities for all the infrastructure – roads, rail, bridges, buildings, water systems, telecommunications and energy infrastructure – that professional engineers design and deliver.

According to Dario Tomat, Chairman of the Assessment Panel for RPEng, since operation commenced in August, demand for RPEng registrations continue to increase and he expects all professional engineer members will ultimately register with the scheme.

The registration of professional engineers through a high-quality and affordable scheme provides peer acknowledgement of the professionalism of members who register and helps promote high standards of ethical practice.

Mr Tomat said that members could look forward the continued development of the RPEng registration scheme. There are three important strategies being pursued to further the progress of recognition of the profession he said:

“Firstly, we are aiming to expand registration to at least three new disciplines this year: environmental, chemical and geotechnical.

“Secondly, Professionals Australia will continue its lobbying efforts to expand mandatory registration for professional engineers to each state and territory.

“It is encouraging that the new Victorian Government has committed to implementing mandatory engineer registration, and that discussions between Professionals Australia and relevant Ministers regarding its establishment continue,” said Mr Tomat.

Mr Tomat believes that coupled with the scheme already operating in Queensland, such a move will precipitate action in several other jurisdictions leading to a mandatory national professional engineer registration.

“Finally we are continuing our efforts to promote awareness of the scheme to industry. This means that we can expect employers to adopt the RPEng title as an industry standard in engineer accreditation,” said Mr Tomat.

Registered Professional Engineer (RPEng) – the practical mark of quality in engineer registration.

As RPEng continues to grow, as does the demand on our Assessors. To alleviate the load, and ensure applications are assessed timely, the scheme needs more Assessors, particularly in IT&T, Structural and Mechanical.

If you have 15 years’ experience or more and are interested in becoming an Assessor, please e-mail: rpeng@professionalsaustralia.org.au.

Dario Tomat – Chair of the Assessment Committee

Invitation to become an Assessor

RPEng a continued success

12 Information and Communications Technology

Professionals Australia produces in-depth analysis of the industries in which members work so that they can plan for the future. For the full industry briefing, go to Industry Briefings on our website: http://www.professionalsaustralia.org.au/transport/support/industry-briefings/.

Information and communications technology (ICT) professionals contribute the specialist skills and capabilities required to deliver and manage technological change across every industry—these people are essential to Australia’s innovative and competitive economy.

A report into the sector by the Australian Workforce and Productivity Agency predicts more than 30,000 new jobs will be created in the next several years, but there’s a shortage of local talent—particularly women. In order for Australia to keep up with the demands of digital technology, it needs to train more ICT professionals and decrease the reliance on foreign workers. Meanwhile, many in the industry must be prepared to ride a wave of downsizing, outsourcing and offshoring.

The total number of ICT workers in Australia is 597,700, of which a significant proportion are professionals—218,689 are in technical and professional roles and 168,322 are in management and operations roles. Depending on which figures you look at, ICT makes up somewhere between 4 and 5 per cent of the total workforce and contributes as much to GDP as the resources sector—somewhere between 6.9 and 7.5 per cent. Australia’s ICT industry is the 14th largest in the world and fifth largest in the Asia Pacific.

Only 32 per cent of ICT workers in the ACT are employees compared with 73.8 per cent in Tasmania and 63.0 per cent in New South Wales. Needless to say, a high proportion of Australia’s ICT workforce is made up of contractors, and the Australian Public Service is the largest purchaser of IT contracting services.

Information and Communications TechnologyIndustry Briefing

The overview

Figure 1: People employed in ICT by state and territory

Source: CIIER data

New South Wales

Western Australia

Queensland

Australian Capital Territory

South Australia

Northern Territory

Victoria

Tasmania

4,380 4,07924,443

192,194

155,441

84,264

33,375

44,925

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Information and Communications Technology

The greatest growth in ICT jobs since 2003 has been in Western Australia and Queensland—close to 50 per cent each. The state with the slowest jobs growth in the same period was South Australia, with just 9.2 per cent.

According to the Centre for Innovative Industries Economic Research (CIIER), ICT contributes 6.9 per cent to national GDP and generates $91 billion worth of revenue per annum. There is, however, some debate around just how much of a contribution the industry makes to the overall economy. As those who work in the industry would know, the ‘digital economy’ is diverse. As well as ‘ICT’ being an industry in its own right, activity is distributed across many other industries. Because of its pervasive nature, it presents the ABS and industry bodies with a conundrum on just how to compile key statistics for the industry and they frequently change tack.

Figure 2: Percentage of permanent IT&T jobs in each state and territory

Source: derived from CIIER data

Figure 3: Types of ICT work by state/territory

Source: CIIER data

Telecommunications Wholesale Manufacturing Software & Services

14 Information and Communications Technology

The industry as a whole recovered quickly from the effects of the global financial crisis (GFC) and grew by 7 per cent in 2013 but opportunities for professionals have not been as forthcoming. While growing steadily until 2008, the professional ICT labour force slowed markedly as a result of the GFC and off-shoring and remained stagnant until as recently as 2012. In 2013, it showed signs of continued recovery, growing by 1.5 per cent.

The number of employees involved in the supply of ICT goods and services grew by 2 per cent in 2013 even though there were significant job losses in telcos.

Large telcos and multinationals continue to use outsourcing and offshoring in an attempt to relieve global competitive pressure—the downside to this approach is that it distorts the domestic labour market. Meanwhile, governments continue to look for ways to cut costs.

A recent spate of job losses in the telecommunications industry includes Telstra’s July 2014 announcement that it would send 650 highly skilled, permanent and contract jobs from its Global Services division to India over the next 12 months (this comes after thousands of Telstra job losses over the past two years), the M2 Group, which owns Dodo, iPrimus and Commander, sending 150 jobs to the Philippines and Optus laying off 4 per cent of its workforce (350 people) in the first half of 2014. In a sign that high numbers of job losses don’t always equate with low profits, Telstra has reported a 17.7 per cent rise in revenue from its cloud services operations (which is within Global Services) and a 20.7 per cent increase from its managed network services.

IBM axed 1500 Australian jobs in mid-2013, sending many offshore to Asia and New Zealand, and a further 500 jobs are estimated to be lost in 2014 as the multinational gets set for changes ‘in a market focused on cloud computing, mobility and analytics’. This follows Hewlett Packard’s 2012 workforce downsizing of 8 per cent (27,000 people) globally.

ICT jobs in other industries are not immune either. Employees in banks and IT consultancies are reporting being laid off after training up their replacements who turn out to be recent immigrants on 457 visas. The Queensland government cut their ICT workforce by 1700 in 2013 and the Federal Government is reducing the public sector by 14,500 jobs nationally.

Skills shortages exist both in highly specialised sections of the industry and at entry level. Typically, a short term approach to staffing and training is taken by many employers which in turn creates workplaces lacking in opportunities for career progression and skills development, thus adding to the problem.

The Department of Employment 2013-14 Survey of Employers who have recently advertised (SERA) shows that skill shortages are not a feature of the Australian labour market and that employers filled a record proportion of vacancies—84 per cent of professional ICT vacancies were filled and ICT professional roles attracted the highest number of qualified applications of any occupational grouping. By the same token, the 2013 Graduate Destinations Survey shows that graduate employment is at its lowest level since 1993.Despite little evidence of current skills shortages, roughly 10 per cent of the ICT workforce is made up of either permanent or temporary skilled migration and thousands of temporary migrants are entering the Australian professional ICT workforce each year (9271 at last count in 2011-12). Occupations in the top 15 for visa’s granted in 2013-14 included ‘Developer Programmer’ (1900 visas, up 5.7 per cent from 2012-13), ICT Business Analyst (1200 visas—a drop of 8 per cent from 2012-13) and ‘Software Engineer’ (1060 visas—a 4 per cent increase on 2012-13).

Current performance

Skills shortages

Skilled migration

Downsizing, outsourcing and offshoring

Figure 4: ICT professionals 2009–2103

Source: CIIER data

IT&T Management and Operations

IT&T Technical and Professional

IT&T Sales Professionals

15

For a glimpse into the not so distant future, we can look to the Gartner group which made some radical predications about the future of the industry at its symposium held in Florida in October 2014. Amongst these are that by 2018, businesses will require half the number of process workers and five times the number of digital workers than they have traditionally and by the same year, the cost of business operations will be reduced by 30 percent through ‘smart machines and industrialised services’. These tend to suggest a downsizing of the labour force as a whole but also in ICT itself.

In the short term, IBIS World forecasts revenue growth of 4.7 per cent in 2014-15 for ‘Computer System Design Services’ and 4.6 per cent for ‘Data Processing and Web Hosting Services’. Little or no growth is forecast for ‘Telecommunications’.

In the medium term, the Department of Employment projected the total number of ICT workers to grow by 43,600 (9.4 per cent) between 2011-12 and 2016-17. ICT professionals make up 22,000 of these and growth should be at a faster rate than for the industry as a whole (10 per cent). The greatest growth in professional employment will be for software and applications programmers (from 85,500 to 93,500 or 9.3 per cent), managers (from 44,700 to 50,300 or12.6 per cent) and business and systems analysts (from 32,600 to 36,900 or 13.2 per cent).

A number of factors are driving demand for ICT professionals in the longer term including the NBN (requiring 16,000 to 25,000 personnel over 10 years), cloud computing, government and business expanding further into e-commerce and e–service delivery and the correlated need for data security, mobile technology and a continuing rapid rate of change.

However, IBIS World forecasts negative annualised growth (-0.5 per cent) in telecommunications over the next five years. The introduction of the NBN is seen by many telcos as a threat that will upend the current competitive environment of wired telecoms, hence the current round of job shedding in preparation.

Likewise investment in 4G networks will tighten competition amongst wireless network carriers. Some growth, however, will take place from technological advancement, greater network coverage and infrastructure upgrades.

Data processing and web hosting services are forecast by IBIS to grow at 3.2 per cent per annum until 2018-19. The domestic industry is expected to benefit, at least in the medium term, from data security concerns and privacy and surveillance legislation associated with offshoring data.

Revenue growth of 3.0 per cent is also predicted in computer systems design services mostly as a result of systems upgrades and postponed infrastructure investment, for instance, the 2014 New South Wales budget included hundreds of millions of dollars for landmark technology improvement programs in The Department of Police and Justice and the Office of Finance and Services. Other drivers include the NBN, cloud computing and voice over internet protocol (VoIP). Computer consultants are expected to be in high demand as businesses look for solutions capitalising on these advances in technology.

On the employment front, IBIS predicts a continuation of the trend towards ICT services being provided from outside Australia.

The outlook

Information and Communications Technology

Computing professionals IT Managers

Figure 5: Net permanent migration of IT professionals 1998-2012

Source: ACS

16

For the purposes of this report, the resources sector is comprised of metal ore mining (iron ore; copper; gold; silver, lead and zinc; and bauxite, nickel and other metal ores), non-metallic mineral mining and quarrying (mineral sands, uranium, manganese, gravel, rock, limestone, clay, diamonds, gemstones, salt and other minerals) and exploration and other mining support services (in-house mineral exploration services, and mining services provided by specialists).

Australia’s resources sector benefits from vast, high quality reserves that are easy to extract and this makes our industry highly competitive in global markets—exports accounted for 70 per cent of total resources revenue in 2013-14. In particular, the sector has boomed in the past decade because of rapid economic growth in China and the associated demand for iron ore, 95 per cent of which is mined for export.

Mining remains the biggest contributor to Australia’s GDP and employs 265,000 people as at the June quarter 2014.

The ascension of China and India and associated rising commodity prices has been a boon for Australia’s resources sector and for many Australian workers.

The sector has received a massive injection of capital in the past decade. This stream of investment has flowed through exploration, mining services and construction and is now making its way into production and output as so many projects reach completion. Jobs opportunities remain, especially in the resource rich states, but now they are less to do with construction and more to do with operations.

The overview

ResourcesIndustry Briefing

Resources

Australia’s mineral commodities make up the majority of national export income. The foremost exports are iron ore, black coal, bauxite, lead, mineral sands, alumina, uranium, aluminium and gold. Iron ore is Australia’s primary export commodity and its largest markets are China, Japan, South Korea and Taiwan. Western Europe accounts for a smaller, but significant share of mineral exports.

The main domestic industries dependent on Australia’s resources sector for raw materials are the construction industry and the mining industry itself which, in the past five years, has undergone a massive expansion and boom in construction activity. Another major component of the boom has been strong domestic demand for Australia’s mining support services and exploration industries.

No matter which way you look at it, the sector is concentrated in three states—Western Australia, Queensland and New South Wales (Figure 1).

Export markets

The domestic market

Where the jobs are

Figure 1: Resources sector geographic concentration

Source: Compiled from IBIS, and ABS data

Employment

WA QLD NSW OTHER STATES & TERRITORIES

40.6%

29.2%

17.3%

12.9%

17

Resources

Source: Compiled from IBIS, and ABS data

Source: Compiled from IBIS, and ABS data

Enterprises

WA QLD NSW OTHER STATES & TERRITORIES

36.8%

24.4%

19.7%

19.1%

Salaries & Wages

WA QLD NSW OTHER STATES & TERRITORIES

46.6%

26.9%

15.6%

10.9%

Western Australia• Burrup ammonium nitrate • Iron Bridge iron ore • Mine of the future iron ore • WAIO Nelson Point iron ore • WAIO optimisation iron ore • Horizon 1 iron ore • Mt Webber iron ore • Iron Valley iron ore • Roy Hill iron ore • Keysbrook zircon

Queensland• Rocklands copper• Dugald River zinc• Lady Loretta zinc• Charters Towers gold• Port of Townsville copper

New South Wales• Hera gold• Woodlawn zinc-copper

Western Australia hosts the largest share of resources industry organisations, growing to 36.8 per cent over the past few years, reflecting the state’s importance in the sector and accounting for the legendary mass exodus of skilled workers from the eastern states to the west during the height of the boom. The other resource-rich states, Queensland and New South Wales, are home to about 24.4 per cent and 19.7 per cent respectively.

ABS data suggests that the breakdown of mining jobs (excluding exploration and mining support services) during 2012-13 was Western Australia, 41.6 per cent (59,608 people), Queensland, 29.2 per cent (41,844 people) and New South Wales, 17.3 per cent (24,748 people). The breakdown of salaries and wages was Western Australia, 46.6 per cent ($9.7 billion), Queensland 26.9 per cent ($5.6 billion) and New South Wales, 15.6 per cent ($3.2 billion).

While resources projects exist in the other states, there are fewer mining organisations based outside of the big three. Victoria’s resources make up about 10.1 per cent of the total, including gold and energy commodities. South Australia’s share has expanded to 6.1 per cent over the past few years, because of growth in uranium, copper (despite scrapped plans for a $30 billion expansion of Olympic Dam in 2012), gold and iron ore. The Northern Territory (1.2 per cent) and Tasmania (1.5 per cent) extract mainly metallic minerals.

This concentration of work in remote locations has necessitated a FIFO workforce, especially during the past several years. Top occupations in the sector according to the Australian Government’s Resources Sector Jobs Board are engineering and maintenance, operations, exploration and geoscience, health safety and environment, processing, and management. The vast majority of positions in the industry are in the locations where minerals are found, as shown in Figure 2.

Figure 2 – significant minerals resources projects at the committed stage (April 2014)

Source: BREE

18 Resources

Just four enterprises in the sector account for around 40 per cent of total revenue. Concentration is even higher in iron ore extraction which requires large-scale operations and is intense in Western Australia. The biggest operators include BHP Billiton, Rio Tinto and Xstrata Holdings. However, joint ventures are common on large projects and smaller operators have proliferated in the past five years—growing in number by 1.5 per cent per year. A significant smaller player is the Fortescue Metals Group, with 2.9 per cent of market share.

Industrialisation in developing countries, China and India in particular, has led to rising prices, rapid expansion and increased employment in the sector over the past 10 years.

The value of committed resources projects came off its peak of $268 billion in April 2013 to $229 billion at the end of April 2014. Nevertheless, the Australian resources sector is still experiencing increased capacity and output. Revenue grew at an average 4.9 per cent per year between 2009-10 and 2013-14 and then grew by 15.1 per cent in 2013-14 alone.

But the rush to capitalise on China’s boom has resulted in an oversupply and lower prices. In an effort to reduce costs, many operators are now insourcing jobs instead of hiring contractors and as a result, employees are being laid off in the mining services support part of the industry.

Despite this change in arrangements, employment in the sector as a whole has risen slightly (by 1.6 per cent in the year to June 2014) but is now lower (by 2.4 per cent) than it was in the previous quarter. According to the ABS, gross operating profits in the sector fell by 15.2 per cent (seasonally adjusted) in June 2014 while wages and salaries rose 3.3 per cent.

Notwithstanding this volatility, global demand remains strong and for most commodities is still growing. For example, against expectations, China’s National Bureau of Statistics reported a 7 per cent rise in iron ore imports in the year to September 2014.

Employers

Current performance

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Resources

The number of committed projects continued to decrease between October 2013 and April 2014. Although the value of new committed projects increased, it was not by enough to offset the large volume of projects that have moved from the construction phase to the production phase. The surge in investment over the past five years has led to an abundance of high-value projects being completed and entering their production phase. In particular, seven iron ore projects worth $16.7 billion in total were completed in 2013-14 (Table 1).

Another indicator of the decline in new projects is the measure for quantifying exploration activity, meters drilled, which fell 4.9 per cent in the June quarter 2014, 19.5 per cent lower than in the June quarter 2013.

The project pipeline

Table 1: Project summary (April 2014)

*Maximum investment

Aluminium, Bauxite, Alumina

Copper

Gold

Infrastructure

Iron ore

Lead, Zinc, Silver

Nickel

Uranium

Other commodities

Total

2

5

8

12

13

–

3

5

9

57

2

8

13

14

20

3

7

2

22

91

–

2

2

9

5

4

–

–

2

24

–

–

1

3

7

1

–

1

2

15

500

7873

1740

25,900

29,839

–

3000

3500

2876

75,228

1650

3154

2451

24,777

28,748

487

5243

575

8003

75,088

–

343

320

9511

11,928

2389

–

–

845

25,336

–

–

116

2510

16,731

58

–

98

720

20,233

No. No. No. No.$m* $m $m $m

Publiclyannounced

Feasibility Committed Completed

Source: BREE

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IBIS World observes that the mining industry typically enjoys high labour productivity, but that this has not been so in the past few years as labour shortages push up wages and other input costs. IBIS points to an annual increase in wages and salaries of 19.4 per cent between 2009-10 and 2013-14 even as new mines entered the production stage. Total wages in the sector accounted for 12.6 per cent of revenue in 2013-14.

Exploration and construction are more labour-intensive than production at established sites and employment in the sector is expected to level off in the short term (Table 2).

The government Survey of Employers who have Recently Advertised (SERA) reveals that skills shortages are not a current feature of the Australian labour market and resource-related occupations are now among the easiest to fill. The survey reports large numbers of applicants competing for the available positions. In 2013-14, there were 35.7 applicants for each vacancy in resource-related professional occupations compared with a 19.6 average for all professions. Of these, 27.0 applicants were qualified and 5.7 were suitable compared with averages for all professions of 16.3 and 3.0 respectively.

Stories about the value of the Australian dollar and iron ore appear in the pages of our major newspapers almost daily, highlighting the importance of the commodity to our overall economy and the significance of the value of the dollar to Australia’s minerals trade. The relationship between iron or prices and the value of the Australian dollar is a complex one that needs to be acknowledged in any analysis of the sector.

A number of factors come into play, including that ‘as the division shifts focus to production, the interplay between global demand, the cost structure of Australian producers and the value of the Australian dollar will determine performance’ and ‘a weaker Australian dollar favours local producers’ (IBIS World) and the dollar ‘needs to go down when the terms of trade and investment are declining, just as it went up when the terms of trade and investment were rising’ (RBA deputy governor, Phillip Lowe).

Because minerals prices are set in US dollars, unanticipated movements in the value of our currency against the greenback can also affect miners’ revenues in the short term.

Global iron ore prices have been volatile over the past five years and prices have slumped 40 per cent since the beginning of 2014 because of a glut in supply. By mid-November they had fallen to $US69.58 a dry metric ton—the lowest price since June 2009. In the same period, the Australian dollar weakened against the greenback.

According to the latest available ABS data, employment fell in most segments of the mining industry between 2011-12 and 2012-13. The exception is iron ore mining which employed 2869 additional people—a 10.6 per cent increase.

During 2012-13, non-metallic mining employment fell to 12,745 people, a decline of 4.3 per cent. Wages and salaries dropped 2.8 per cent to $989 million in the same period.

Between 2011-12 and 2012-13, employment in exploration and other mining support services fell to 46,350 people, a decline of 5.1 per cent. Wages and salaries rose 2 per cent to $4.9 billion in the same period.

Employment and wages

Skills shortages no longer a problem for employers

World price of iron ore and weakening Aussie dollar

Resources

Table 2: Mining operations employment, short-term trend

Metal ore mining 68,754 68,536 -0.3

13,315 12,745 -4.3

48,822 46,350 -5.1

Non-metallic mineralmining and quarrying

Exploration and othermining support services

2011–12 2012–13 % change

Source: ABS, 8415.0 – Mining Operations, Australia 2012-13

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Resources

The Bureau of Resources and Energy Economics (BREE) forecasts subdued resources investment in the short term despite recent government initiatives to streamline the project approvals process. Added to this are delays to projects in the investment pipeline because of declining market conditions. The number of projects at the publicly announced stage was 14 lower at the end of April 2014 than it was at the end of October 2013 and the number of Feasibility Stage projects was by down 18 in the same period.

However, BREE suggests opportunities for further investment remain, as demonstrated by the number of projects announced and being studied for feasibility. And the up side of the investment peak is substantial increases in annual production capacity, including 215 million tonnes of iron ore. BREE reassures workers with the news that while the investment phase lasted for around five years, the output phase will last for decades and deliver ongoing economic benefits like employment, royalties and ongoing operating expenditure in Australia.

In the medium term, reduced investment in the sector will lead to lower levels of employment in construction but new opportunities in production. BREE expects increased demand for commodities and slowing supply growth from reduced investment to support higher prices.

IBIS forecasts compound growth of 6.2 per cent each year until 2018-19 including further expansion of mining activity in Western Australian iron ore production. On the other hand, exploration and mining services revenue is expected to continue to decline and mining capital expenditure is forecast to peak in 2014-15.

Over the next five years, significant investments in capacity will come on-stream. Despite some volatility, total economic output is expected to continue increasing as is mining’s contribution to the economy through direct employment.

BREE reminds us that mining investment has come down from a very high peak and that it is cyclical in nature. Australia still has many high-quality mineral deposits that can be developed when the economic cycle rebounds.

In summary, the China-Australia free trade agreement will remove tariffs on ‘all resources products within two years’ and in particular, ‘transformed resources products, such as refined copper and alloys (unwrought) (currently subject to 1 and 2 per cent tariffs), aluminium oxide (alumina) (8 per cent), nickel mattes and oxides (3 per cent), unwrought zinc (3 per cent), copper waste and scrap (1.5 per cent), unwrought aluminium (5 and 7 per cent tariffs), aluminium waste and scrap (1.5 per cent), unwrought nickel (3 per cent), other mineral substances (3 and 5 per cent tariffs), and titanium dioxide (6.5 and 10 per cent tariffs)—many upon the Agreement entering into force’ (DFAT).

The agreement also ‘locks in zero tariffs on iron ore and gold, improves the transparency of non-tariff measures and preserves full access for Australian producers to trade remedies available under the WTO, including anti-dumping and countervailing measures’.

In addition, efficiencies are expected to be gained through employing newer technologies, such as heap leaching (a series of chemical reactions that absorb specific minerals and then separate them from other materials) in copper and gold mining.

The outlook

Medium term

Long term

Australia-China free trade agreement

Figure 4: Medium-term employment projections (jobs, growth and wages)

Source: BREE

Employment (‘000)

Employment growth (%)

Average wage ($’000)

22

BHP Billiton announced in November that it will double the size of the Olympic Dam copper mine over the next 10 years. New capacity will come from underground mining instead of the open-pit approach that was scrapped in 2012. The first stage will inject $US200 million to increase production by one third by 2018.

About 3500 people are currently employed at Olympic Dam and BHP has not yet made an undertaking on how many new jobs will be created as a result of this project apart from saying that the number would be ‘considerable’.

The signing of a Civil Nuclear Cooperation Agreement between India and Australia in September 2014 will enable Australia to resume selling uranium to India.

The move comes following the Gillard Government lifting a long-standing ban in 2011. (Australia had initiated the South Pacific Nuclear Free Zone treaty, which prevented members from selling uranium to India on the basis that it did not accept full-scope nuclear safeguards in 1986).

Australia has nearly one-third of the world’s known economic uranium resources and the agreement provides an opportunity for growth in the Australian uranium mining and exploration industry. In response to the signing, New South Wales also announced that six companies have been invited to apply for a Uranium Exploration Licence in New South Wales, opening up a new avenue of supply.

It is likely to be several years before any actual uranium sales to India take place but India plans to boost its nuclear power output from 4 per cent now to 25 per cent in 2050, presenting Australia with long term prospects of becoming a key supplier.

New plans for Olympic Dam expansion

Nuclear cooperation agreement with India

Resources

www.professionalsaustralia.org.au

23

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