Chapter 1 - Introduction and background to the inquiry
1.1
The Senate referred this inquiry into workforce challenges in the
transport industry to the Employment, Workplace Relations and Education (EWRE)
Committee on 6 September 2006, with a reporting date of 9 August 2007.
1.2
The purpose of the inquiry was to:
- Address the scope of the problem of labour and skill shortages affecting
all sectors of the transport industry and the likely consequences of serious
labour shortages;
- Review labour supply research undertaken for the transport industry, to
canvass the views of industry, consumers and unions in regard to recruitment
and employment practices in the industry;
- Alert Parliament to the projected labour shortage in the transport
industry which will seriously affect the distribution of all goods and most
travel services in the next ten years;
- Make recommendations on Commonwealth-led coordination of improved
training delivery for the sector, and address issues related to employment
incentives that are characteristic of the industry.
Conduct of the inquiry
1.3
The inquiry was advertised in full text in The Australian on 13,
19 and 27 September 2006; 11 and 25 October 2006; and 8 November 2006. It was advertised in abbreviated form from 22 November 2006 to 21 March 2007. Submissions were invited from relevant interest groups, organisations, agencies and
individuals with an interest in the transport industry and workforce.
Thirty-seven submissions were received, primarily from professional
associations, unions, peak industry groups and the government sector. Public
hearings were held in Sydney in March 2007, in Brisbane and Melbourne in April
2007, and Perth and Adelaide in May 2007, and in Canberra in June 2007. The
committee also conducted a number of site visits to key industry locations
during the inquiry.
Background
1.4
The EWRE Committee has previously considered workforce shortages in
relation to the horticulture industry[1],
and previously looked at skills shortages and how they might be addressed
through a more effective training regime. Throughout the course of the current
inquiry it became evident that a number of common themes exist across these investigations.
Evidence of available worker supply being unable to meet industry demand; of a
lack of coherent (or sometimes any) future planning on the part of governments,
industry groups and employers; of debates on the possibilities presented by
migrants for filling worker shortages; and of concerns around worker pay and
conditions. All were touched on in both inquiries.
1.5
However, while these were common themes, the nature of the discussions,
and the conclusions the committee has been able to draw, are not identical. The
transport industry and its workforce have their own particular characteristics,
which are considered in this report, and these provide the context for both the
investigation and the committee's recommendations.
Industry Context
1.6
Transport specific businesses contributed 4.5 per cent of total gross
domestic product in 2004-05, amounting to approximately $39 billion:
Table 1: Transport and storage GDP, 2000-01 – 2004-05
|
|
2000-01
|
2001-02
|
2002-03
|
2003-04
|
2004-05
|
|
T and S GDP
|
31777
|
33029
|
35256
|
36783
|
38682
|
|
- Road
|
10613
|
11262
|
12019
|
12845
|
13691
|
|
- Rail, pipelines and
other transport
|
4530
|
4828
|
5303
|
5498
|
5488
|
|
- Air
|
4457
|
4205
|
4742
|
5139
|
5661
|
|
- Services and Storage
|
12182
|
12723
|
13177
|
13298
|
13842
|
|
T and S GDP
per capita
|
1563
|
1625
|
1734
|
1809
|
1903
|
|
T and S percentage pf
national GDP
|
4.2
|
4.2
|
4.4
|
4.4
|
4.5
|
Notes: Figures are in $ million at 2003-04 constant
prices. T and S GDP relates to transport-specific businesses. Services
and storage includes water transport.
Source: Australian Bureau of Statistics, Australian
national accounts, national income and expenditure (5206.14), Time series data
(quarterly) 1959-2005.[2]
1.7
In the same period, the transport sector provided 454,000 jobs, or 4.6
per cent of total employment:
Table 2: Employment in transport and storage, 2000-01
– 2004-05 ('000)
|
|
2000-01
|
2001-02
|
2002-03
|
2003-04
|
2004-05
|
|
Road
|
213
|
221
|
218
|
231
|
215
|
|
Rail
|
37
|
32
|
36
|
39
|
37
|
|
Air and space
|
53
|
51
|
46
|
45
|
47
|
|
Water (sea)
|
13
|
14
|
13
|
13
|
14
|
|
Other transport
|
1
|
1
|
1
|
1
|
1
|
|
Services to transport
|
68
|
69
|
66
|
69
|
77
|
|
Storage
|
30
|
24
|
27
|
30
|
44
|
|
Transport and storage nfd*
|
3
|
2
|
2
|
5
|
21
|
|
Total employment T and S**
|
419
|
413
|
408
|
433
|
454
|
|
Total employment – all industries
|
9057
|
9168
|
9395
|
9560
|
9845
|
Notes: Figures represent the annual average of
quarterly data. * Not further defined. Insufficient detail was collected from
survey respondents to allocate them to a specific industry code. ** Figures may
not sum due to rounding.
Source: Australian Bureau of Statistics, Year Book
Australia 2006 (1301.0)
1.8
In February 2006, the National Transport Commission (NTC) released a
report entitled Twice the Task – a Review of Australia's Freight Transport
Task.[3]
This report responded to forecasts that Australia's land freight task would
double between 2000 and 2020, and agreed on balance that the freight task will
indeed increase significantly in a relatively short period of time[4].
Mining and drought: factors driving
demand
1.9
The report found that the key influences on demand driving this increase
would include
...increases in demand for minerals and agricultural production,
and the substitution and growth of imports as both consumer goods and raw
material inputs. The increasing desire to reduce inventory will see growth in
air freight and probably a continuing reduction in average delivery size to end
destinations.[5]
1.10
The committee heard evidence supporting aspects of this statement, and
other conclusions of the report, such as the problems caused by the lack of a
nationally consistent regulatory regime, and the need to plan for future
upgrading of road and rail infrastructure. A recurring theme was the
interaction between the commodities boom and the transport industry, and the
need for effective transport and logistics systems to support economic growth
being driven by the mining sector. Some witnesses suggested that realising the
full potential of the mining sector could be jeopardised if more attention was
not paid to finding solutions for current workforce problems in the transport
industry:
In whichever documents we read and in whichever reports come
out, transport and logistics hardly ever seems to get a mention. We would like
to make the point that without it nothing will happen. With a lot of the
development the is mooted to happen in the north west of this state, there is a
fair chance that it will not happen because we just will not have the people to
make it happen.[6]
1.11
Similarly, the Department of Employment and Workplace Relations submitted
that:
...despite commodity prices surging over recent years, mining
companies have been stymied in their efforts to increase the export volume of
resource commodities due to a number of factors. These factors include the
existence of pockets of transport 'bottlenecks', and general transport related
constraints.[7]
1.12
The practical effect of the mining sector's requirement for efficient
transport systems and workers to move minerals and ore, and its capacity to
attract workers away from other operators with large salaries, is dealt with in
more detail later in the report. Unfortunately, this was not a matter the
committee was able to pursue with the major mining companies.
1.13
The committee also heard evidence supporting the Twice the Task report's
suggestion that increased agricultural production could exacerbate existing
stresses in the transport industry workforce, particularly in the event that
the current drought breaks and agricultural production revives. Mr Ron Finemore
explained, in relation to the trucking industry, that:
We have 175 drivers. And today we are 17 short. For the last 12
months, we have always been between 10 and 20 short on any day. Forty-nine of
these are casual, and if we get rain in the southern half of Australia, half of
these will disappear back to their family farms to drive tractors for the
cropping season.[8]
1.14
It could be expected that an up-turn in agricultural production due to
changed weather conditions would contribute to increased freight loads, placing
further pressure on transport systems, and associated infrastructure. The
Australian Logistics Council, in commenting on the commodities boom, told the
committee that:
...there is a question about this boom. It is not a matter of
whether it is going to continue or not but whether the real level of skills
shortages is masked by the drought. The best case scenario would be that we
have record mineral prices continuing into the future and therefore record
demand for minerals, and it rains again and the agricultural sector also places
demand on the transport and logistics sector. So the best case scenario would
even further strain our capacity both from a hard infrastructure perspective
and from a people perspective moving forward.[9]
1.15
Concurrently, the continuing drought may in itself put pressure on
transport systems through increased movement of livestock, with farmers
offloading animals, through slaughter or forced sale, which have become too
expensive to feed. There could also be increased need to transport fodder and
water to drought affected areas.[10]
Passenger services
1.16
Movement of freight was not the committee's only concern. The effects of
worker shortages in the transport industry also extend to commuter passenger
services in larger capital cities. The committee heard evidence, particularly
in relation to railways, of an increasingly urgent risk that worker supply is
already, or will soon be, out-stripped by demand. The Australasian Railway
Association submitted that, in addition to an expected increase of non-bulk
freight of 82 per cent in tonne-kilometre terms between 2003 and 2020, and the
continuation of rail being the preferred mode of transport for bulk freight,
passenger services were also expected to increase:
All governments are increasing investment in passenger services
due to community demands for improved rail services and reliability. In 2004
there were 589 million passenger journeys on urban rail and tram services and
9.4 million passenger journeys on long distance services, and this is expected
to increase. Without considerable effort to improve the labour force's
availability, flexibility and quality, the rail industry carries a high risk of
not realising its objective of providing the transport mode of choice.[11]
1.17
The committee noted development of more sophisticated urban transport
developments in discussion with TransAdelaide about the introduction of the new
Flexity tram system, and with TransPerth, concerning the extension of services
in both cities. The larger established networks of Sydney, Melbourne and Brisbane,
meanwhile, are under increasing strain from lack of capacity.
Shipping and aviation
1.18
While the committee benefited from substantial evidence provided by road
transport and railway operators, the terms of reference for the inquiry require
broad investigation of other sectors of the transport industry too, including
the maritime and aviation sectors. The committee found that considerable
workforce challenges exist in these sectors as well. For example, the
Australian Shipowners Association submitted that:
Evidence suggests within Australia the demand for suitably
qualified seafarers is extremely high, particularly with respect to deck and
engine officers. Some employers/operators have suggested that any future growth
will largely depend upon their ability to attract, train, recruit and perhaps
most critically, retain a competent and sustainable workforce.[12]
1.19
The Maritime Union of Australia told the committee that Australia's
international seaborne trade grew substantially in recent years, with an annual
growth rate of 9.3 per cent. Further, forecasts for world commodity demand and Australia's
increasing reliance on oil and other imports are projected to further increase
external maritime trade, as well as the annual domestic shipping task, which
may increase by as much as 26.6 per cent by 2013.[13]
Of particular note was the statement that:
In net terms, Australia currently relies on imports for 17 per
cent of overall petroleum consumption, but by 2020, the Australian Bureau of
Agricultural and Resource Economics estimates the figure will rise to 46 per
cent. Other industry analysts think this view is optimistic, with the
Australian Petroleum Production and Exploration Association saying our oil
import dependency will rise to 78 per cent over the next 10 years. Even on the
lower estimates, this means a huge increase in the shipping task required to
import clean petroleum products into Australia[14].
1.20
In aviation, the industry context appears to be heavily influenced by
competitive market pressures, particularly in association with passenger
travel, but also with aircraft maintenance and some freight services. The
committee visited Aviation Australia, which is the leading provider of
aeroskills, or basic aircraft maintenance training in Australia, and one of the
leading aircraft maintenance training organisations in the world. The committee
heard that while major airlines and the military historically had a major role
in training and employing aircraft maintenance apprentices, this responsibility
now increasingly falls to other organisations as the airlines strive for
competitive advantage and economic efficiency.
1.21
For its part, Qantas Airways submitted that international aviation is
conducted in an increasingly competitive and distorted operating environment,
which has been highlighted over the past five years. In this time, the global
aviation industry has experienced unprecedented shocks and pressures for
change, to which Australia's airlines have not been immune. In particular, Qantas
has felt the effects of an increasingly globalised market in which there is
ever increasing competition from government owned or supported 'national
agenda' carriers, which have caused Qantas' market share to decline from 40 per
cent at privatisation in 1995 to 32 per cent now[15].
Competitive pressure from low-fare carriers is also increasing.
1.22
The committee noted with particular attention that:
The structural advantages of these carriers have a significant
impact on Qantas' competitiveness in international markets. These include
government ownership and support, bankruptcy protection, lack of competition
regulation, better access to capital, funding of security and insurance costs
and more favourable taxation frameworks...Further, globalisation means that
companies are increasingly able to source their goods and services, including
labour and skills, from a worldwide market. Boeing as an example, is reported
to be outsourcing over 70 per cent of the manufacturing of its new 787
aircraft. The above factors challenge legacy business models such as ours, and
mean that we are constantly having to find new ways to increase our own
competitiveness to ensure our ongoing viability. This includes the need to
continually seek efficiencies from all areas of our operations, including our
workforce. Ensuring that our workforce has the right skills and capabilities,
and that the maximum efficiency and effectiveness is gained from these has
never been more important than now[16].
1.23
The committee heard that competitive pressures in the aviation industry
have been further heightened by rising fuel costs, with both Qantas and Virgin
Blue introducing fuel surcharges into their fare structures for both domestic
and international flights in recent times.[17]
Interestingly, the Department of Employment and Workplace Relations noted that
although fuel costs also make up an important component of total operating
costs in the road transport industry:
...it appears that the high fuel prices experienced in 2006 have
not materially dented road transport employment due to the continued strong demand
for road freighting services. With petrol and diesel prices currently easing,
it is possible that road freight operators may benefit from reduced cost
pressures, presenting a further potential upside risk to employment in that
sector over the coming year, assuming that overall demand for freighting
services remains at its current level.[18]
1.24
Overall, the committee understands that pressures of increased demand
for transport services are common across all sectors, and that most future
projections are for increases. The industry's ability to meet these demands is dependent
in large part on the availability of suitable transport workers; and here too
the committee heard that there are important challenges.
Workforce Context
Effects of low unemployment
1.25
Low unemployment levels are generally considered to be a positive
economic indicator, usually correlated with strong growth and appropriate
monetary policy. The committee recognises that an extended period of economic
growth in recent years has resulted in historically strong labour market conditions,
with unemployment generally below five per cent, and participation at around 65
per cent.[19]
1.26
In line with this, employment growth in the transport industry has
trended steadily upwards, with particularly strong increases in the past 12
months. The largest increases have been in the services to transport sector,
followed by the road transport and railway sectors.[20]
The Department of Employment and Workplace Relations advised the committee
that:
An examination of vacancy trends shows demand for labour has
increased over the last five years, with growth in vacancies. Additionally,
employment projects for the industry suggest continued labour demand for growth
over the next five years, albeit at a slower rate.[21]
1.27
The committee became aware during the inquiry that, although there are
important and widespread benefits associated with such low levels of
unemployment, particularly at the macroeconomic level, some transport operators
are struggling to attract and retain workers in a climate of tight labour
market demand. The Australian Logistics Council told that committee that 'We
are...a labour intensive industry at a time of national labour shortage. We are
in the competition for labour in this country like never before...'.[22]
Similarly, the Transport Forum WA noted that:
I think that probably the most important thing I can say is that
we are in a very diverse and extreme competitive environment and, like a lot of
other industries that we see and hear about, 'skills shortage' are not buzzwords;
the skills shortage is a reality. We are facing a very hard road ahead...[23]
Ageing of the current workforce
1.28
The committee further heard evidence from all quarters that skills
shortages resulting from tight labour market conditions are being exacerbated
by the ageing of those currently employed in the transport and logistics
industry. More than 40 per cent of workers are aged 45 years or older, and
substantial workforce attrition through retirement can be expected in the next
five to ten years. Although the effects of ageing are likely to be more severe
in the mining and manufacturing sectors, some estimates suggest the transport
and storage industry faces a shortfall of up to 10,000 employees over the next
five years.[24]
There are some variations across sectors, which will be dealt with in more
detail later in the report.
Image problems
1.29
The industry is not only expected to suffer worker shortages due to
ageing. The committee heard consistent evidence that many employers and
operators are having considerable difficulty attracting young people, and
women, to enter the transport and logistics field in the first place. There are
a number of reasons for this, but one of the most common cited by witnesses at
public hearings, or in written submissions, was that negative stereotyping
associated with industry image is a major inhibitor to engaging young people.
The committee repeatedly heard such comments as:
The T&L industry doesn't have a good image as a career
choice by potential new T&L entrants or the community at large. To a great
extent this is a legacy of the past with lasting images of cowboy drivers,
militant unionists and blue singlets.[25]
The freight logistics industry's inability to attract young
employees is not helped by its image. When asked, few young people would
nominate freight logistics as their desired career path – regardless of the
financial rewards to do so. The image of freight transport as a dirty, nuts and
bolts – or old economy – industry contributes to this perception.[26]
I think we are still seen as running around with blue singlets
and beer bellies and sucking on cigarettes that we should not be smoking and
taking so many drugs to let us stay awake until we are Superman. I cannot deny
that may well have been the case in the past. We need to overcome that.[27]
1.30
In conclusion, employment as a long haul truck driver has few
attractions to young people with families. Anecdotal evidence to the committee
suggests that many current drivers would give up the work if they could,
because of this dislocation to family life.
1.31
In the contemporary workforce context, then, many employers and
transport operators are experiencing some difficulty securing appropriately
skilled workers, in sufficient numbers, to satisfy the industry's increasing
employment demand. Considerable attention and energy is being devoted to
finding effective ways to attract and retain workers, particularly in terms of
favourable workplace conditions, image change and effective training, and these
will be discussed in detail later in the report, along with the committee's own
inquiry findings.
1.32
Chapter 2 of this report will investigate in more detail problems with
attracting employees to the industry, with special attention to young people
and women. Chapter 3 discusses ways in which training for the transport and
logistics industry may be reviewed to better address workforce challenges,
which may be read in conjunction with chapter 5 on strategies for retaining
workers. Chapter 4 outlines some of the major issues faced by employers in managing
the transport and logistics workforce, while chapter 6 discusses longer-term
strategies and overarching policy conditions.
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