Chapter 2
Engineering in Australia: a background
Introduction
2.1
People with engineering skills and qualifications are a critical
component of Australia's economy. Engineers are not only directly employed in a
vast array of different industries, many of which are among Australia's most
economically important, such as mining, but are also essential for underlying
infrastructure projects such as roads, power, bridges and the like. The first
half of this chapter provides an overview of the engineering sector, the
engineering profession and the labour market, and key government policies are
described. The second part of the chapter describes the current skilled
migration arrangements, before analysing the role that skilled migration might
play in continuing to address the engineering shortage.
What is engineering?
2.2
It is important from the outset to provide a description of what
engineers do. The committee noted a sense among witnesses and submitters that
the role of engineers was not well understood by the broader population. Indeed
the committee itself was enlightened to hear of the wide scope of work and many
challenges facing engineers on a day to day basis across Australia. The Australian
National Engineering Taskforce (ANET) described these responsibilities and
challenges:
Engineers design, build and maintain infrastructure routinely
used by the community – roads, railways, ports, water, electricity, gas and
communications. They perform key roles in feasibility scoping, structural and
system design, damage control and maintenance – monitoring and addressing
safety and quality throughout systems. Engineers develop and test practical
solutions to everyday and extraordinary problems. Engineers conceive, design
and manufacture innovative products, processes and systems that contribute to
the nation’s prosperity, security, health, culture and environment.[1]
2.3
Professor James Trevelyan had a slightly different perspective on the
subject, describing the job of an engineer as being an influence on other
people to achieve real value, on the basis that:
Engineers do not build bridges. They do not build cars. They
do not build roads. Engineers organise these things to happen, and the actual
work is done by other people.[2]
2.4
Professor David Beanland submitted that engineering is not a well
understood profession, certainly in contrast to law or medicine which receive a
lot of attention in the media.[3]
Professor Roger Hadgraft observed that while people can 'look out the window
and see the work of engineers' they don't actually understand what engineers do
'when they get to work in the morning and what the nature of that work is'.[4]
2.5
Skills Australia noted the challenge in capturing 'engineering' with a
single consistent definition able to cover all the facets of the profession.[5]
For the purposes of identifying relevant data, it chose the approach taken by
Engineers Australia and the Australian Bureau of Statistics: the Australian and
New Zealand Standard Classification of Occupations (ANZSCO).[6]
2.6
The ANZSCO approach looks at whether occupations include engineering
work, and is less focused on the existence or otherwise of professional engineering
qualifications. [7]
2.7
Engineering occupations were also defined by Engineers Australia in its
2010 Report: The Engineering Profession in Australia: a profile from the
2006 Population Census. In the report, Engineers Australia decided whether
a particular occupation was an engineering one or not on the basis of whether
the occupation 'would reasonably allow a qualified engineer to use engineering
related skills when performing the work'.[8]
A history of engineering training in Australia
2.8
Up until the early 1990s the public sector provided engineering skills training
to cadets and graduates. Typically employees would enter the public sector
after high school or tertiary studies. Following perhaps a decade of on-the-job
experience, many of these workers would be head hunted by private industry. The
practical effect was that industry did not have to train its workers:
governments did. This helped to create 'a climate in which companies did not
need to invest in their own education or training capabilities'.[9]
2.9
Submitters to this inquiry agreed that the quality of training formally
provided by government cadetships was very high. For example, the committee
heard from witnesses representing Consulting Surveyors National of the
significant contribution that governments used to make to training the
engineering workforce:
Government has traditionally been a very good provider of
opportunity for traineeships and cadetships and those sorts of things.
Certainly in Victoria, Melbourne Water Corporation were very, very good at
that. There was a great pathway for many surveyors, and we are losing those
opportunities. Government is demanding in its service delivery from the private
sector that it has to be snappy and it has to be on the money. We have to
provide it as best we can and keep the costs as low as we can, and I guess that
means that the opportunities to provide incentives to traineeships with private
businesses are difficult. I think we are definitely suffering from that.[10]
2.10
It is a matter of historical record that, during the 1980s and 1990s,
the public sector began to outsource infrastructure and other engineering work
to private industry. Government public utility, infrastructure and other
departments offered redundancies to engineers and public companies were
privatised. Engineering positions in the public sector dried up, and cadetship
programs were cut. Consult Australia cites a study of public sector employment
share over 1984–2005. During this period the percentage of electricity, gas and
water supply industry employees that are in the public sector dropped from 95.9
per cent to 54.7 per cent. In the construction industry this dropped from 12.2
percent to 0.5 per cent in 2005.[11]
2.11
The first and most obvious implication of this is that government
departments, having shed their engineering staff, now lack any real in-house
engineering expertise. Mr Ian Marler, Vice Chairman, Consulting Surveyors
National, elaborated on the difficulties that arise when government departments
lose their engineers with surveying skills, using a New South Wales example:
[If] you took the Institution of Surveyors in New South
Wales: many years ago it probably had 80 per cent government and 20 per cent
private. I would say that almost the reverse would apply today. There has been
a gradual transition as more and more government departments shed staff.
That raises the other complexity, too, in that if you are
tendering for government work, whether you have competent people within
government able to assess the tenders and all of those sorts of things. It has
that downside. But I would guess that it has been that 80/20 back to 20/80.[12]
2.12
In addition, industries which had previously drawn from the ranks of the
public sector for the engineers now find themselves without a ready source of
highly-trained and experienced workers. Private companies are increasingly
required to take responsibility for the training and development of their own
engineers.
2.13
The consequences for particular engineering disciplines with a
historical reliance on cadetships were severe. Mr Craig Woolridge,
from the Australian Institute of Traffic Planning and Management, explained how
the Victorian government had withdrawn from offering graduate positions and
cadetships and how this had impacted on the skills of engineers in the sector:
I started at 1983 at Main Roads. That was the last year they
had an annual program and then they stopped and it went back to every second
year. In late 1990s they stopped training altogether and decided to go to a
skeleton workforce and the private sector will take care of all of our needs.
Unfortunately, the private sector did not take care of all the needs and then
we ended up with a training crisis. Main Roads has certainly stepped back into
that fold. Whether that is enough effort is questionable. Particularly in some
areas like traffic and transport, there is certainly not enough effort in
there.[13]
2.14
Ms Leanne Hardwicke from Engineers Australia acknowledged that
following the transition of engineers from the public sector, the private
sector 'dropped the ball' on training, describing the transition in the
following terms:
When it first happened, when the public sector started not
taking on so many and outsourcing everything, the training of engineers,
particularly the graduates, actually fell by the wayside and they kind of had
to take charge of their own training and development. As the skills shortages
have developed and there has been more demand for engineers, one of the main
recruitment tools that they have used is graduate development programs. They
get them on the pathway of training in various areas, giving them lots of
experience in different aspects and moving them towards becoming, for instance,
a chartered engineer. Once they are a chartered engineer, then they are
considered to be capable of independent practice and able to move around the
company. So they do get all those opportunities, and the skills shortage has
had a positive effect in terms of the private sector taking on that key
training role that the public sector used to have.[14]
2.15
The Australian Power Institute accepted that industry had fallen 'asleep
at the wheel'. Mr Simon Bartlett, Chairman of the Board, explained to the
committee:
The industry went through a period of really squeezing and
cutting down. It went from government owned to privatised. Owners came in who
really squeezed. I think the focus was taken off recruitment, development and
the relationships with universities. That is not just a problem in Australia.
That has happened in deregulated countries. The UK went through that. It has
become even more serious there.[15]
2.16
Improvements to engineering training are discussed in Chapters 3 and 5.
Types of qualifications
2.17
Skills Australia divides engineering occupations into three categories
in the table below, each of which is linked to a particular level of education.
Engineers Australia and ANET accept this breakdown, noting that there are some
limitiations to the approach.[16]
![Table 1: Engineering qualifications, AQF levels and occupations](c02_1.gif)
Source: Skills Australia.
2.18
Engineering courses taught in Australian universities are accredited by
Engineers Australia, which will soon take on responsibility for accrediting TAFE
courses too. Courses are accredited using regularly audited competencies
developed against international standards. Engineers Australia uses these same
competencies to assess the qualifications of applicants under skilled migration
programs.[17]
2.19
Engineers who complete the qualifications outlined above are not
recognised as fully qualified until they have completed a period of supervised
practice. ANET notes that a professional engineer will usually reach the
standard for admission to the status of Chartered Professional Engineer in
three to five years.[18]
Engineers Australia defines chartered status as 'a higher set of competencies
than applied to degree accreditation and signifies the engineer offers all the
attributes' of a professional.[19]
2.20
For reasons of simplicity, use of the term 'engineer' in this report
will encapsulate people with any of the three categories of qualifications listed
above.
The Australian engineering labour market
2.21
Skills Australia advises that it is difficult to properly analyse the labour
market for engineers as there is no consistent definition of 'engineer' used in
data collection by the Australian Bureau of Statistics.[20]
Nevertheless, Skills Australia has worked with the available data to come to some
interesting conclusions.
2.22
In the diagram below, Skills Australia presents the baseline engineering
workforce from 2006 to 2011. The data presented in this graph reflects the
total number of persons employed in occupations that best reflect the skills
that engineers possess – therefore the total number of persons employed in
these occupations is likely much higher than the number of persons with engineering
qualifications.[21]
2.23
The graph below shows a gradual increase in the number of people
employed as managers and professionals in engineering occupations during 2006–2011
(331,000 managers in 2006 to 393,000 in 2011, and 485,000 professionals in 2006
to 615,000 in 2011). In contrast, the number of technicians and trade workers
was relatively constant during the same period (179,000 in 2006 to 195,000 in
2011). The trade cohort contracted by 11 per cent during the global financial
crisis in 2009 but increased by the same amount in the following year.[22]
![The below shows a gradual increase in the number of people employed as managers and professionals in engineering occupations](c02_2.gif)
Source: Skills Australia[23]
2.24
Skills Australia reported that the number of fully qualified engineers
has increased significantly. From 2006 to 2011:
- The number of engineers with professional qualifications has increased
by 27 per cent;
-
The number of engineers working in management has increased by 17
per cent; and
- The number of engineers working in technician and trade
occupations has increased by 11 per cent.[24]
![Table 2: Summary of fully qualified engineers, in engineering occupations, 2006 - 2016](c02_3.gif)
Source: Skills Australia,
Submission 80, p. 3.
2.25
University and VET pathways to engineering qualifications are discussed
in Chapter 3.
Growth in demand for engineers
2.26
The demand for employees with engineering and related skills is higher
than supply. The four main drivers of demand are the resources sector, defence,
the National Broadband Network and other major infrastructure projects.[25]
2.27
While the figures in the previous section show that the engineering
labour market is growing in all three qualification categories, this growth is
not sufficient to meet the demand, and engineering skills shortages have been
pronounced for many years.[26]
2.28
Skills Australia has applied the growth rates of the past 5 years to
forecast Australia's workforce needs in 2016. A conservative estimate, based on
the data, is that demand for professional and management engineers will
increase by 37,000 persons by 2016 and technician and trade engineers by 6,000
persons.[27]
2.29
This estimate is conservative because the figures have not been adjusted
to take into account the number of large infrastructure, defence and mining
projects that are scheduled in the next few years. Further, these estimates
have not accounted for the number of engineers approaching retirement which
could be as high as 4 per cent annually.[28]
Anticipated retirement rates vary between engineering fields, for example, the
Australian Power Institute estimates that up to 30 per cent of engineers in
that industry will retire in the next ten years.[29]
Attrition through retirement is discussed in Chapter 5.
Resources
2.30
The resource sector's demand for labour is dependent on major project
construction activity levels and mineral exploration investment. The Bureau of
Resources and Energy Economics estimated the total value of projects at $456.5
billion, of which 102 advanced projects were valued at $231.8 billion. [30]
Skills Australia forecasts that employment growth in mining operations will
increase by 89,000 employees from 2010–2016, with an annual average growth rate
of 7.9 per cent. Employment growth is expected to be highest for machinery
operators and drivers, followed by technicians and trade workers.[31]
2.31
The committee received evidence during hearings in Queensland and Perth
that was consistent with these forecasts.[32]
Defence
2.32
Engineering professions and trades are crucially important to the
defence materiel supply industries. Many of these defence jobs require highly
skilled employees with higher qualifications and extensive workplace
experience. Skills Australia observed that these types of specialist skills are
often subject to significant competition between employers, particularly the
growing resources sector.[33] This situation is made even more acute when
defence tenders occur at the same time as other major projects. Relevantly for
the defence engineering sector, Skills Australia identified likely skills gaps
in electronic, electrical, mechanical and aerospace engineers.[34]
National Broadband Network
2.33
The National Broadband Network (NBN) is a roll out a national wholesale,
open access, high speed broadband network. The government has forecast that the
total capital expenditure will be $35.9 billion.[35]
Construction of the network is scheduled to commence by December 2012 to more
than 750 thousand premises.[36]
NBN Co estimates that the entire project will directly create between 16 000
and 18 000 jobs.[37]
Data is not available to estimate how many of these jobs will be engineering related,
however Skills Australia considers the NBN to be a driver of demand for
engineering skills.[38]
Other infrastructure projects
2.34
Across the country the federal government, along with state and
territory governments are making belated investments in infrastructure. Skills
Australia cites a 2010 OECD report which found that Australia has an
'infrastructure deficit' arising in part from under-investment in the 1980s and
1990s.[39]
Particular problem areas are:
- Port and rail infrastructure. The demand for freight is expected
to double between 2000 and 2020.
- Urban infrastructure. As the populations of cities increases, so
does congestion, which is estimated to cost $13 billion a year (1.5 per cent of
GDP). If urban infrastructure is not improved, this cost could be more than $20
billion by 2020.
- Water and Electricity infrastructure. Chronic water shortages and
water restrictions are only partly connected to climate change. A high
proportion of electricity infrastructure that was built in the 1960s now
requires replacement.
-
Energy and rural water management, as a result of environmental
concerns about greenhouse gas emissions, require significant capital investment.[40]
2.35
Infrastructure Australia was established to co-ordinate infrastructure
spending and to provide advice to the government on policy. As a result of an
infrastructure audit in 2008, nine priority projects and 28 other projects were
identified, costed at more than $60 billion.[41]
For example, the Department of Infrastructure and Transport is administering
the Nation Building Program which represents an investment of more than $36
billion over six years in transport infrastructure alone.[42]
Skills shortage
2.36
When the term 'skills shortage' is used, it can mean one of two things:
employers experiencing difficulty in recruiting a person for a specific
vacancy; or existing employees not having the skills necessary for the position
that they hold.[43]
According to Skills Australia, the first situation is a recruitment difficulty
and the second is a skills gap. For the purposes of the committee's
deliberations, both are relevant.
2.37
Skills Australia pointed the committee to research indicating skills
shortages are 'relatively widespread for engineering professional and
para-professional occupations'.[44]
Of the fifty engineering occupations surveyed only 3 were not experiencing
skills shortages in 2011.[45]
Significantly, a number of these professions have been experiencing skills
shortages for protracted periods of time. For example, civil engineers have
been in short supply since early 2000.
2.38
The Chamber of Minerals and Energy of Western Australia agreed that the
skills shortage is more pronounced for professional and para professionals. Mr Bruce Campbell-Smith,
Executive Officer, acknowledged the perception in the rest Australia that
anyone could get a job in mining in Western Australia, and stated that this
simply wasn't the case:
There is an expectation issue and not just within the Eastern
States. We are talking about growing our workforce another 20,000 in 2012. We
are at pains to say that it is a skilled workforce we are chasing. For example,
the number of jobs advertised on a popular employment website, Seek, for mining
engineers, week to week you get up to 1,000 mining engineers advertised. Now,
some of those may have dual ads, dual listings with different HR firms, but at
the same week there will be 43 truck drivers advertised or 21 kitchen hands, in
low, low numbers entry level positions into the mining industry. I think mining
companies are not finding it hard to source entry level and unskilled people
into the industry. Our challenge is skilled labour. With respect to some of the
people in the eastern states, that problem is probably exacerbated.[46]
2.39
Employers throughout 2011 continued to have difficulty recruiting in
most of the professional engineering specialisations, indeed the proportion of
vacancies filled was only 41 per cent – lower than any other employment group
assessed by DEEWR.[47]
![Figure 4: Proportion of vacancies filled and number of suitable applicants per vacancy, engineering professionals, 2006-07 to 2010-11](c02_4.gif)
2.40
In relation to engineering trades, employers experienced some difficulty
in recruiting appropriate staff, as demonstrated on the graph on the following
page.
![Figure 6: Proportion of vacancies filled and number of suitable applicants per vacancy, engineering trades, 2006-07 to 2010-11](c02_5.gif)
Low participation rates of women
2.41
The low participation rates of women in engineering professions and
trades are clearly an important factor in the skills shortage. As demonstrated
by the graph below, the participation rate of women in engineering professions
has increased by 1.7 per cent since 2006, but remains low at only 21.5 per
cent.
![Figure 3: Total Males and Females in selected engineering occupations, 2006 and 2011](c02_6.gif)
2.42
Dr Sally Male reported that the unemployment rate for female
professional engineers is twice as high as it is for male engineers. Further,
among engineers with five to ten years experience, women have an average salary
that is 8.5 per cent less than their male counterparts.[48]
Government policies and programs
2.43
The Australian government has a number of policies and programs targeted
at addressing skills shortages, or at the very least minimise their impact.
This section outlines these programs, and the policy and advice structures that
underpin them. While the focus here is on action taken by the federal
government, the committee acknowledges that state and territory governments
have also implemented measures to address skills shortages.[49]
This policy area cuts across a number of government portfolios and in many
instances enjoys bipartisan political support.
Skills and training
2.44
Unsurprisingly, measures to improve skills and training for engineers
are central to government's efforts to address the shortage. Under machinery of
government changes announced in November 2011, commonwealth administrative
responsibility for skills and training moved from the Department of Education,
Employment and Workplace Relations (DEEWR) to the Department of Innovation,
Industry, Science and Research (DIISTRE). Neither department made a written
submission to this inquiry, but DIISTRE did give evidence at a public hearing
in Canberra. The committee would have found a submission from DEEWR (in
particular) useful, and considers that, as a matter of course, the Department
should make submissions to future inquiries of this committee.
2.45
The DIISTRE website provides the following statement in relation to
government funding for skills development:
The competitiveness and productivity of an organisation is
dependent on its access to the skills it needs. To build a highly skilled
Australian workforce, individuals and businesses require access to high quality
training. The Australian Government meets this need through initiatives and
programs designed to help individuals and businesses access training and
workforce development advice. It also supports the organisations that provide
these services.[50]
2.46
A number of training, trades and apprenticeship programs are
administered by DIISTRE. These include:
- The National Workforce Development Fund, which provides funding
to industry to support training and workforce development to meet current and
future skill needs;
- The National Resources Sector Workforce Strategy, which addresses
the skills and labour needs of the resources sector;
- The Critical Skills Investment Fund, which provides co-funding
for industry projects that provide training and employment opportunities in
critical industry sectors (this is part of the National Workforce Development
Fund);
- The Australian Apprenticeships Access Program, which provides
vulnerable job seekers with nationally recognised pre-vocational training,
support and assistance to overcome any barriers they might experience when
seeking skilled employment; and
- The Productivity Places Program, which provides training to
support the development of skills in Australia to meet existing and future
industry demands.[51]
2.47
An engineering cadetships program was announced by the government in
December 2011. Over the next four years the government will fund 265 commencing
engineering cadets a year for higher degree research students participating in
the cadetship in engineering or science. The cadetships will involve a
combination of formal research training at university and work experience with
a business to conduct research and development tasks.[52]
2.48
In the past, the government has provided HECS-HELP discounts to
engineering subjects. This practice was discontinued in the 2012-2013 budget.
The department advised the committee that there is limited evidence that
discounted student contribution amounts encourage students to pursue studies in
a particular field, explaining that:
Students are predominantly motivated not by price but by
their interests, abilities and career preferences when selecting courses. This
is particularly the case when students have access to an income contingent
loan, such as HECS-HELP, that allows them to defer payment of their
contribution amounts until they are earning enough to do so.[53]
Infrastructure
2.49
While programs administered by the Commonwealth Department of
Infrastructure and Transport do not necessarily address the root cause of
shortages, the Department assists the government to 'promote, evaluate, plan
and invest' in infrastructure and aims to foster an improved transport system
across Australia, and as such has a role to minimise the impact of shortages.[54]
Infrastructure Australia was established to co-ordinate infrastructure spending
and to provide advice to the government on policy. As a result of an
infrastructure audit in 2008, nine priority projects were identified and 28
other projects flagged, costing more than $60 billion.[55]
2.50
The Department for Infrastructure and Transport is administering the Nation
Building Program, representing an investment of more than $36 billion over six
years to 2013–14 in
transport infrastructure.[56]
In its submission to this inquiry the Department identified three key initiatives
aimed at improving infrastructure delivery:
- The National Infrastructure Construction Schedule (NICS),
launched in May 2012;
- Microeconomic reform delivered through the Council of Australian
Governments Infrastructure Working Group, including a prequalification system,
public private partnerships, alliance contracting and design and construction;
and
- Measures to encourage further competition through the involvement
of international firms.[57]
2.51
Chief among these initiatives is the NICS, which establishes a national
government infrastructure project pipeline. The NICS is implemented through
collaboration between federal, state and territory and local governments, and
aims to provide industry with online information on major infrastructure
projects committed by governments across the country.[58]
2.52
The NICS contains information on all infrastructure projects over $50
million procured by the general government sector as defined by the Australian
Bureau of Statistics. It also contains information on tender opportunities
within a project for contracts estimated to be worth more than $25 million. Currently,
the NICS only lists those projects seeking tenders on contracts. Over time, the
NICS will show how projects move along the project lifecycle, 'leading to a deep
and liquid pipeline of infrastructure opportunities.'[59]
2.53
Each government provides information on the NICS for the projects it has
procured. This information will be updated on a regular basis, according to
each jurisdiction’s budget cycle. Where a government announces a new
commitment, the NICS will be updated within a week of that announcement. Local
Government projects will be included on a voluntary basis, with information
updated regularly.[60]
The NICS may also include information on projects below $50 million, or
projects procured by Government Business Enterprises if the responsible
jurisdiction provides the necessary information.
2.54
The NICS enjoys support among submitters, with a number calling for its
establishment earlier this year.[61]
Engineers Australia described the NICS as 'the first step toward providing a
transparent, long-term view of infrastructure 'pipeline planning''.[62]
2.55
The committee is pleased that the NICS has come to fruition, and can
envisage the system helping to efficiently allocate scarce engineering and
related skills across the pool of major infrastructure projects.
Advisory bodies
2.56
Professor Ian Chubb AO was appointed Chief Scientist on 19 April 2011
and commenced on 23 May 2011. The Chief Scientist provides independent advice
to the government on matters related to science, technology and innovation.[63]
2.57
The government established the Prime Minister's Science, Engineering and
Innovation Council, as the 'pre-eminent science advisory body to government'. [64]
Members include the Prime Minister, Ministers, the Chief Scientist (Executive
Officer) and a group of experts. One of the five experts, Dr Cathy Foley, has
an electrical engineering background.[65]
Skilled migration
2.58
A well-publicised consequence of the skills shortage across a number of
industries has been the increased use of skilled migration. This can be
approached by employers in one of two ways. Australian companies may recruit
skilled workers from overseas, or project management tenders are awarded to
international engineering companies who bring their employees into the country
to fulfil the contract.
2.59
For many years the federal government has operated skilled migration
programs to enable businesses to bring workers from overseas to address skills
shortages. The most common program is the Temporary Business (Long Stay) –
Standard Business Sponsorship (Subclass 457) visa (Subclass 457 visa). More
recently, Enterprise Migration Agreements (EMAs) have been introduced to streamline
the Subclass 457 visa application process. The government also operates a
General Skilled Migration program, under which people with qualifications on
the Skilled Occupations List may apply for permanent migration to Australia,
independent of employer sponsorship. Most engineering occupations are listed on
the Skilled Occupations List, which is produced by Skills Australia and used by
the Department of Immigration and Citizenship (DIAC) to determine eligibility
for independent skilled permanent migration.[66]
2.60
The table below, prepared by Skills Australia on the basis of data
provided by DIAC, shows recent migration trends of engineering managers,
professionals and technicians and tradespeople by visa category:
![The table, prepared by Skills Australia on the basis of data provided by DIAC, shows recent migration trends of engineering managers, professionals and technicians and tradespeople by visa category](c02_7.gif)
Source: Skills Australia [67]
2.61
The table above indicates an increase in visa grants for subclass 457
temporary business visas and employer sponsored visas, but a reduction in visa
grants under the General Skilled Migration program.
Subclass 457 visa
2.62
The 457 visas enable employers to recruit skilled overseas workers to
meet the shortfall of skills demands in Australia. Among other requirements,
employers with a business that operates in Australia must meet benchmarks
relating to training Australian citizens and permanent residents to be eligible.[68]
Employers who have been trading in Australia for more than 12 months may select
between different training benchmarks:
- Training Benchmark A: the employer pays the equivalent of at
least two per cent of recent payroll expenditure to an industry training fund
for the training of Australian citizens or permanent residents, each year that
the employer is a sponsor [69];
or
- Training Benchmark B: the employer must provide evidence of
spending the equivalent of one per cent of payroll on training for their
employees who are Australian citizens or permanent residents.[70]
2.63
Eligible expenditure for the purposes of meeting Training Benchmark B
includes the following types of training:
- paying for a formal course of study for the business’s employees
who are Australian citizens and Australian permanent residents, or for TAFE or
University students, as part of the organisational training strategy;
-
funding a scholarship in a formal course of study approved under
the Australian Qualifications Framework for the business’s employees who are
Australian citizens and Australian permanent residents or, for TAFE or
University students, as part of the organisational training strategy;
- employment of apprentices, trainees or recent graduates on an
ongoing basis in numbers proportionate to the size of the business;
- employment of a person who trains the business’s Australian
employees who are Australian citizens and Australian permanent residents as a
key part of their job;
- evidence of payment of external providers to deliver training for
Australian employees; and
- on-the-job training that is structured with a timeframe and
clearly identified increase in the skills at each stage, and meeting specific
criteria.[71]
2.64
The wages paid to staff for time spent attending training are not
expenditure for the provision of training, and cannot be counted towards
Training Benchmark B, except where the staff are apprentices, trainees or
recent graduates.[72]
In general terms, 100 per cent of apprentice, trainee and graduate salaries can
be counted towards the training benchmark.
2.65
Where an applicant employs an apprentice or trainee, and there is a
formal apprenticeship or traineeship agreement in place, 100 per cent of the
salary provided to this apprentice or trainee can be counted towards
calculating whether the training benchmark of one per cent of payroll
expenditure has been met.[73]
2.66
Where a company has a formal graduate program, 100 per cent of the
graduate's salary can be counted for the length of that program (up to two
years). In order to be eligible, the graduate must be working in an occupation
that is relevant or related to their recently completed qualification.
Expenditure on graduate salaries where there is no a formal graduate program
cannot be counted.[74]
2.67
Companies must provide 'auditable' evidence of expenditure to meet the
training benchmarks and non-compliance will result in ineligibility to apply
for subclass 457 visas in the future.
2.68
Employers must meet nine sponsorship obligations, including an
obligation to ensure that sponsored employees enjoy equivalent terms and
conditions of employment as Australian workers undertaking the same work at the
business's workplace in the same location.[75]
The temporary skilled migration income threshold has been set at $49,330 per
annum, meaning that workers in occupations that have a market salary below this
rate may not be sponsored under the Subclass 457 program.[76]
2.69
A number of submitters praised the subclass 457 visa program, arguing it
was a crucial measure to meet short term skills shortages. During the Brisbane
hearings Ms Megan Motto, Chief Executive Officer, Consult Australia,
explained to the committee that skilled migration was absolutely imperative,
particularly because around two thirds of projects have been delayed in the
short term, or indefinitely, because of skills shortages. Indeed, a reduction
in skilled migration would 'cripple' Australian industry. [77]
Ms Motto stated:
I would say that the firm-sponsored skilled migrant
entries—that is, those that come in on a 457 as sponsored by firms—have a very
high success rate because they are hand-picked by the firms and the firms are
picky about who they have working for them. They have good English language
skills and they have a high degree of confidence that they will transition into
the Australian culture and the particular firm's culture and that they will
have a high degree of success, because firms are not going to go to the expense
of bringing people into Australia if they think they are going to fail.[78]
2.70
The Association of Mining and Exploration Companies also praised the
flexibility of the subclass 457 visa program, as it enable companies to meet
short term demand in a cyclical industry.[79]
2.71
Submitters reminded the committee that the training requirements
attached to the subclass 457 visa program assisted in addressing skills
capabilities. These conditions were outlined in detail earlier in this chapter.
2.72
The committee asked Consult Australia to comment on the allegation that
firms will always resort to use of skilled migration because it is cheaper than
employing local labour, and that as a consequence, firms will have no incentive
to train and develop staff capability. Mr Jonathan Russell, Senior Policy
Adviser, Consult Australia, observed that most companies prefer Australian
labour as it is cheaper and immediately productive, further, companies who
recruit overseas workers have to meet strict training criteria.[80]
Ms Motto pointed out that there is a significant difference between 'employers
who are doing the right thing by Australian industry but fundamentally need
additional skills to complete projects' and 'those industries that are
employing low-level non-technical labour style skills and whose industries have
more of a history of abuse of the 457 system in terms of employing Australians
to do the same level of work'.[81]
Enterprise Migration Agreements
2.73
Enterprise Migration Agreements represent a streamlined and fast tracked
Subclass 457 visa program. In July 2010 the National Resource Sector Employment
Taskforce recommended, among 30 other recommendations, that the government
introduce EMAs. In March 2011 the government accepted all 31 recommendations.[82]
On 10 May 2011 the federal government announced a new temporary migration
initiative to help address the skill needs of the resources sector, Enterprise
Migration Agreements (EMAs).[83]
2.74
EMAs are available to projects with a capital expenditure of at least $2
billion and a peak workforce of 1500 workers. Applicants must also submit a
comprehensive training plan that demonstrates how the project will equip
Australians to meets future skills needs in the resources sector. The EMA
process is intended to streamline negotiation arrangements for access to
overseas workers and guarantee faster processing times for visa applications.[84]
2.75
The first EMA was approved on 25 May 2012 and was granted to the new
iron ore mining Roy Hill project in the Pilbara region of Western Australia.
The EMA permits Roy Hill to sponsor up to 1715 workers through the 457 visa
program during the three year construction phase, where Australian workers
cannot be found. The project requires more than 8000 workers, and it is
expected the remaining 6285 jobs will be filled by Australian workers. As part
of the EMA, Roy Hill must provide 2000 training places for Australians,
including more than 200 Australian apprentices and trainees.[85]
2.76
The Australian Association of Mining and Exploration Companies (AMEX) argue
that EMAs should be available to all mineral resource projects regardless of
their value or size, and the $2 billion threshold should be removed. AMEX
reports that its members have indicated that smaller projects are also faced
with labour shortages.[86]
General Skilled Migration program
2.77
The government also operates a General Skilled Migration program, where
people with qualifications on the Skilled Occupations List may apply for
permanent migration to Australia, independent of employer sponsorship..
2.78
Companies are increasingly resorting to skilled temporary migration in
an attempt to fill vacancies. However this brings with it challenges, as
without careful management can result in a deterioration of the underlying
problem. The limitations of the skilled migration program are discussed in the
next section.
The role of migration in addressing the shortage
2.79
Currently migration provides about half of the skilled engineering
workforce in Australia. The committee received conflicting evidence in relation
to migration policy in Australia. Some submitters called for greater migration,
such as the expansion of the Enterprise Migration Agreements and skills visas,
where other submitters called for caution – arguing that while skilled
migration was essential, it would not address the skills shortage in the long
term.
2.80
In simple terms, those who urged caution did so on the basis that the
use of skilled migration can have both positive and negative effects. In the
short term, if appropriately trained overseas workers are employed in
industries suffering acute skills shortages, then projects may proceed without
delay and are consequently more likely to be completed on time and to an
appropriate standard. However, too strong a focus on overseas migration to
address skills shortages can result in industry continuing to neglect
investment in training and support for the Australian workforce, thereby
entrenching the shortage and worsening the underlying problem.
2.81
The committee is aware of calls to expand the migration programs, or at
least retain current conditions. For example, in a recent report, the Business
Council of Australia (BCA) makes several recommendations in relation to
migration, calling on the federal government to:
- set policies to support a growing Australian population and
workforce over time by committing to a long-term strategy in accordance with
the projections in the 2010 Intergenerational Report
-
maintain the annual permanent migration program at least at its
current levels (currently at a minimum of 190,000 total; 129,500 of those are
skilled migration)
- ensure flexibility in uncapped temporary migration schemes such
as 457 visas and the efficient implementation of the Enterprise Migration Agreement
program and do not make the requirements to comply with the EMA program any
more onerous for eligible projects
- remove all barriers to the recruiting of engineers and project
managers with the appropriate levels of experience to oversee very large
projects in Australia.[87]
2.82
However, the committee received evidence that increased short term
migration was not a sufficient measure to address the engineering skills
shortage.
2.83
Skills Australia, while supporting the greater use of overseas students
who have completed engineering studies in Australia to meet the shortfall,
emphasised that any use of former international students or overseas workers
should not supplant investments in skills developments for Australians.[88]
2.84
Engineers Australia warned that prolonged use of short term skills
migration (in contrast to permanent migration) can exacerbate the impact of
Australia's skills shortages in the long term. Mr Christopher Fitzhardinge
explained to the committee:
What happens is that you lose the ability for native
engineering expertise to develop within your country and the types of
components, the types of modules and services tend to be global rather than
local. If we are trying to use the investment cycle we have now to grow our
economy—the Australian economy tends to be quite volatile and lumpy—we have to
capture economic advantage from investment cycles and we have to develop
capability that will strengthen us in our economy in the longer term.
Typically, that involves development of professional services not only on the
construction side of projects but on the operation and long-term support of
projects. The use of global procurement managers not only sabotages the local
content and the development of local engineering expertise during the
construction phase but also has an impact on the longer term supply of goods
and services to sustain that project into perpetuity.[89]
2.85
Engineers Australia cautioned that migration may not always be an
available resource to companies, if costs in Australia continued to increase.
Mr Christopher Fitzhardinge explained:
Previously, Australia had a cost advantage in terms of
migration from a number of countries. People could sell their houses, move here
and make a significant profit. What has happened is that with the high
Australian dollar, high Australian property prices and high Australian cost of
living, the thing that will prevent us from securing the engineering skills
that we need will be the differential cost structures between the countries that
are our strong source of migration. In Western Australia, typically it has been
the UK, Europe and South Africa that have provided a significant proportion of
our engineering skills. It really depends on the economic drivers for people to
migrate to Australia from those countries and at the moment they are not as
positive as they were, say, five years ago.[90]
2.86
Professor James Trevelyan agreed with this assessment, submitting that
the experience of migrant engineers in Australia 'is not a happy story universally'.
Professor Trevelyan concluded that from his preliminary research for the
Western Australian government, he believed many migrant engineers on subclass
457 visas would 'be on the next plane out' if there were improvements in
economies in the rest of the world. [91]
This observation is telling, when coupled Skills Australia's anecdotal evidence
that a significant numbers of qualified but unsuitable applicants for
engineering professions have come through the General Skilled Migration
program.[92]
2.87
The Australian National Engineering Taskforce (ANET) submitted that
reliance on immigration to meet the skills shortage is a risky, short term
approach. This is because its success is dependent on the Australian economy
performing well and remaining an attractive destination. ANET urged the
government to adopt a target to reduce the reliance on immigrant engineers over
the next ten years, by increasing domestic graduates and trades.[93]
2.88
The committee was also mindful of the fact that overseas workers who
come to Australia to work in engineering jobs have a higher rate of
unemployment. In a 2010 survey conducted by DIAC, the unemployment rate of all
independent skilled migrants was 3.3 percentage points higher than the national
unemployment rate.[94]
The survey results indicate that engineering professionals have a higher
unemployment rate than total engineers, and this rate is also higher than the
general unemployment rate in Australia. Research has not been conducted into
the cause, but Skills Australia advises that is aware that 'some employers
prefer not to employ qualified engineers who complete their education overseas,
complaining that few meet Australian employment market needs and lack adequate
English language skills'.[95]
2.89
Australia's Chief Scientist, Professor Ian Chubb, told the committee
that as 'a good global citizen' Australia should think about how it supports
engineering capability in developing countries, and this was not done by
'drawing away their talent'. Professor Chubb submitted that Australians need to
'do something about our own back yard', rather than rely on skilled migration
indefinitely:
I do not think it is a solution simply to say we will import
the skills when we need them and turn off the tap when we are replete. We
actually have a need to ensure that we are trying to improve the supply within
the country and to increase it as other countries are doing and then to top it
off through immigration processes, to target particular skill areas where we
might be deficient or take a long time to get up to the need of whatever it
might be. So I think it is a combination but I do not think that, because we
can presently recruit people, it means that we will always be able to in the
areas we want, with the skill level we want, with the capabilities that we want.[96]
2.90
The committee considers that current skilled migration programs are an
effective tool to address immediate skills shortages, but like the majority of
submitters, does not take the view that it is a solution for the underlying
need to invest in education and training programs domestically.
2.91
In the next chapter the committee examines the current education and training
pathways for engineers in detail.
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