Chapter 4 - Challenges for employers
Our problem today is, if you go out there and you train a
driver, the industry just says: 'You've trained him; thank you. I'll pay him
50c an hour more and I'll nab him.'[1]
4.1
Many employers in the transport and logistics industry are experiencing
difficulty recruiting and retaining enough suitable workers to meet their
business needs. This was made clear to the committee early in the inquiry, and
remained an important theme throughout. There are factors related to attracting
workers to the industry, and to training new and existing workers, which
contribute to the problem.
4.2
However, the committee also heard that there are other challenges for
employers in managing current and future workforce needs. These challenges are
focused in two key areas; firstly, problems of inter- and intra-sectoral
competition for workers, resulting in 'poaching' of employees; and secondly,
problems of bureaucratic and legislative complexity, resulting in
administrative burden and inconsistency.
4.3
Employee 'poaching' appears to be widespread in all sectors of the
industry, with particular problems arising from competition for workers with
the commodities sector, and in aviation and shipping, from the
internationalising of that workforce. However, the committee also heard
evidence of employers within the transport and logistics industry attracting
workers away from each other. This highlighted the problems of fragmentation,
and that for workforce challenges to be effectively addressed, employers must
see their own enterprises are part of a larger system.
Competition to attract and retain workers
4.4
The transport and logistics industry is facing a labour sellers market,
in a climate of low unemployment and increasing freight movement activity. Employers
are having to meet their workforce needs by competing for the limited numbers
of skilled workers. Many employers are unused to having to allocate a high
proportion of their investment costs in labour, and this suggests possible
flow-on effects to overall transport costs.
The mining sector
4.5
The problem of competition for workers was mentioned frequently with
reference to the strong mining sector, particularly in Queensland and Western
Australia:
It is a booming economy...We know we did not train and we did not
foresee it. But no-one could have foreseen what has happened in Western
Australia. It has an economy that is growing faster than China's, for crying
out loud.[2]
4.6
Evidence of this practice was provided from witnesses and submissions to
the inquiry from all industry sectors, although it was referred to with
particular frequency in relation to the mining sector, and the current
commodities-driven economic boom. For example, during public hearings in Perth,
the committee heard numerous statements to this effect concerning the situation
in Western Australia:
In Perth, we managed to find someone and employed him for a
start the following morning, and the following morning he was on a plane to a
mine, because that afternoon he had received an employment opportunity. In Geraldton,
the same week, they had not one but two drivers who moved immediately – simply
because of a better opportunity. They were not unhappy with the employer, they
were not unhappy with anything other than that they had an opportunity
elsewhere – and they were highly mobile – in the mining sector.[3]
4.7
Witnesses spoke with particular concern about the size of the disparity
in wages offered by mining companies, and those which they themselves could
afford:
An example would be that a removalist driver with road train
skills in still looking at around $23 an hour. The same person's currency out
on a mine site is in multiples. It is not increases; it is actual multiples of
$23 for someone triple road train rated. Our industry could not withstand that
cost to maintain someone at those sorts of the prices.[4]
There is that three- or four-year period, and this is when it is
very hard to keep them. Otherwise, they can go up to a mine site, work as a
trades assistant and get $90,000 a year. Whilst the boom is on that is great
for them.[5]
4.8
It was acknowledged that this practice of poaching workers from other
operators within the industry[6]
is not entirely new, or in fact exclusive to mining operators. However, changes
to broader economic, industrial and workforce conditions mean such an approach,
lacking strategy, is unsustainable.
There is not a lot of money left to take someone and teach them
for two years. We filch them from each other. That has, historically, always
been the case. We are unable to do that these days. We have run out.[7]
4.9
It was also suggested that the problem of transport workers being lured
to the mining industry to the detriment of other operators is being made worse
in some high-demand skills areas by 'just-in-case' hiring, whereby as many
workers as possible with sought-after skills are engaged, even if they then end
up working in another capacity. For example, the Western Australian state
manager of Grace Removals told the committee that:
There is also an obscene obsession in some of the other
industries to have truck drivers who do not even drive trucks. The HR license
carries so much currency that it is almost a pre-requisite to go onto some
sites when in actual fact these people are never asked to drive. I have a mining
background also...I have spent time at Newman and I know the rules – and I can
assure you that the people who can drive are not driving at the moment because
they are our there earning money whichever way it comes. But this crisis would
have happened regardless.[8]
4.10
It should not be assumed, however, that where this strategy is
practiced, it is only mining companies doing so. The committee also heard
evidence of non-mining transport operators using similar approaches, sometimes
in an attempt to stop the flow of workers in that direction:
The only way we know of is to recruit even larger numbers so the
numbers of persons taken out by the mining industry are replenished. We cannot
compete on the dollar figure and it is the dollar figure that will determine
where these people go.[9]
4.11
The committee contacted representatives of some of the major mining
companies operating in Western Australia during the course of the inquiry, but
was disappointed that a meeting could not be arranged.
4.12
The committee also heard some anecdotal evidence that the flow of transport
industry workers to the mines may be slowing, and that some operators are
beginning to see workers returning to mainstream areas of the industry. For
example, during a visit to the Port of Townsville, which is currently planning
major expansion activities, the committee heard that port operators are aware
of a number of workers who, having spent several years at mine sites in Queensland,
are now returning to coastal and other urban areas. Lifestyle stresses
associated with working in the mining industry were suggested as possible
reasons for this movement.
4.13
The committee heard a similar suggestion in South Australia during a
visit to the TransAdelaide incorporated transport facility, in relation to
workers beginning to return from the mines in Western Australia. Notably, staff
at TransAdelaide told the committee that there are considerable benefits to the
transport industry as a whole of some workers being involved in the mining
sector. First, because mining can provide attractive career paths and longer
term opportunities for workers who may otherwise not become involved in the
industry at all; and second, because returning workers to mainstream transport
operations bring back a range of experiences and skills which enrich those
businesses and operations by whom they are subsequently employed.
4.14
This can also apply to workers who move abroad for a period of time;
Main Roads Western Australia, for example, noted that increasing numbers of
young people in the industry may go overseas and work with a body such as the
London Transport or a road authority for a time, returning with a fresh range
of skills and experiences to contribute to the Australian industry.[10]
Other transport industry sectors
4.15
The competitive battle for a small pool of available workers is not
restricted to the mining industry. The committee heard evidence from a number
of witnesses and submissions that similar problems, though perhaps not always
with the same element of wage-based incentives to workers, are being
experienced in other transport industry sectors as well.
4.16
This includes the aviation and maritime industries, where there is
additional pressure arising from the international nature of workforce
activity, and (in the maritime industry) the fact that many of the seafaring
skills most in demand are exclusive to the industry, and therefore the pool of
available workers is by nature relatively limited.
4.17
In the aviation industry, for example, the Australian Licensed Aircraft
Engineers Association expressed the view that there is a significant problem
with Australian aircraft maintenance engineers, considered amongst the best in
the world, being lured to more attractive overseas opportunities:
Australians qualified in but not restricted to aircraft
maintenance are sought the world over, with poaching of personnel a consistent
and ongoing problem that the employees and government of this country contend
with. In an Australia-wide population of 6,000 licensed aircraft engineers
(LAEs), over 500 spend their working lives in other countries, which is the
approximate equivalent of 8.5 per cent. Added to that, there is a worldwide
shortage at the present time of licensed aircraft engineers and various
incentives such as high rates of pay, shares in company and profit sharing, not
dissimilar to executive profit sharing, and free international and domestic air
travel are used to poach and keep LAEs.[11]
4.18
Similarly, Qantas told the committee that the numbers of pilots willing
to be based overseas to work for other carriers is increasing, and that this is
only likely to continue as global pilot shortages worsen. Further, in relation
to aircraft maintenance workers, there is some evidence of workers being
'poached' in a process similar to that in the mining sector:
It is becoming apparent that other companies with whom Qantas
Engineering competes for labour are often not investing to the same degree (if
at all), resulting in poaching of skilled Qantas engineering staff by such
companies. For example, large aviation manufacturers and MROs in Australia that
do not have apprentices, are hiring Qantas graduates with offers of inflated
wages. If Qantas was to match these offers we would become uncompetitive and be
forced to send maintenance overseas.[12]
4.19
Following this theme, Aviation Australia submitted that if there should
be a loss of base maintenance or heavy maintenance work to foreign countries,
strategies will need to be put in place to ensure enough workers with the
appropriate skills remain available in Australia to meet industry needs here.[13]
Importantly, Aviation Australia also noted that the movement of airline
maintenance work to overseas locations may not be a disadvantage:
Although the prospect of airline maintenance work being taken
overseas will continue to be a very real prospect, it is counterbalanced by the
opportunity for expanded third party maintenance repair and overhaul businesses
by well run organisations.[14]
4.20
As for the maritime industry, the Australian Shipowners Association told
the committee that the biggest factor affecting skilled work, at least as far
as the bluewater sector is concerned, is competitive labour pressure within the
industry itself:
The bluewater sector has traditionally been responsible for
doing the lion's share of training in terms of sponsoring new entrants to the
industry and training them up to be competent to perform work aboard a ship. We
have highlighted in our submission that, whilst this has traditionally been the
case and certainly is at present, other industry sectors have relied on our
industry to be the source of their labour.[15]
4.21
It is clear from these and similar comments that competition for labour
between operators within the transport industry is a difficulty for many
employers. Small employers in particular with limited financial capacity to
match wage-based incentives to attract or retain workers offered by larger
employers, face more serious difficulties.
Regulation and bureaucratic burdens
4.22
In addition to the challenges employers face in competing for a limited
supply of workers, numerous witnesses and submissions to the inquiry also
commented on the difficulties presented by complex regulatory regimes operating
across state and territory borders.
4.23
Uniform transport regulations have been subject to a great deal of
concentrated activity by the transport ministerial council over many years. It
seems inexplicable to the committee that there continue to be complaints from
transport operators, and a wonton tendency on the part of state regulatory
agencies to make up new regulations unilaterally.
4.24
Evidence to the inquiry did not suggest disagreement with the need for a
sound regulatory environment. In fact, many operators see benefits in increased
pressure on operators to meet compliance standards:
...there has been increasing pressure on drivers to comply with
government regulations. This means more paperwork that many drivers,
particularly those who have been in the industry for many years, resist...Whilst
this is a factor in some older drivers dropping out of the industry, the
improved standards are actually improving the attractiveness of the industry to
new entrants.[16]
4.25
However, problems persist. Some witnesses expressed frustration with the
bureaucratic processes associated with training:
...the criteria for what constitutes a traineeship and the sorts
of competency assessments that go with it are not necessarily flexible enough
or broad enough to accommodate our business needs. That becomes a disincentive
to managers, who are finding that they are dealing with a highly, if you like,
bureaucratised process.[17]
4.26
Other industry stakeholders commented that, once workers are trained and
employed in the industry, the burdens of complex regulatory compliance may be so
onerous as to become a disincentive to workers remaining in the industry. This
appears to be particularly the case for long-distance truck drivers, who cross
state and territory boundaries and are confronted with different sets of
regulations in each state. The Sea Freight Council of Queensland, an industry
body representing all sectors within the sea freight logistics chain, explained
that:
Regulation and law enforcement has had a significant impact on
transport industry labour, particularly on interstate drivers, and it is a
major contributing factor to the accelerated rate of departure of long-haul
drivers from our members' businesses. Many drivers feel harassed by what they
believe is trivial enforcement of minor issues...The majority of disputed penalties
relate to log book offences where drivers are penalised for spelling mistakes,
errors in adjusting for daylight savings between QLD and NSW, and incorrect
estimates of time travelled between towns.[18]
4.27
From some small operators, the committee heard complaints about the
difficult task presented by regulatory requirements which are seen as overly
bureaucratic and cumbersome for an enterprise with limited administrative capacity.
For example, members of TOLL Group voiced concerns on this matter:
...we are concerned about owner-drivers and their existence in the
future. Increasing legislative, compliance and commercial frameworks are making
it very difficult. As a general observation, owner-drivers and smaller
operators are finding it increasingly difficult to make a buck and subscribe to
regulation. [19]
4.28
Similarly, the Bus and Coach Association of New South Wales submitted
that increased levels of regulatory control imposed on bus and coach operators
are proving particularly onerous for smaller operators, especially those in
rural areas:
While the larger players in the industry are generally managing
the changing regulatory environment, many smaller, particularly rural operators
have been left reeling, with some seriously considering their future in the
industry. This clearly has implications for the viability of regional and
remote communities in Australia, as well as employment and career prospects
within the industry.[20]
4.29
For other operators, frustrations arise from the time taken for
bureaucratic procedures to run their course, rather than from inherent
complexities or compliance burdens. The South Australian Freight Council commented,
in relation to Maritime Security Identification Cards (MSICs), that:
An application for a MSIC must have a current need for access to
secure maritime precincts (ie, ports) in order to receive a card. MSICs take a
considerable time between application and issuing, due to the need for an
in-depth background check to be performed.[21]
Licensing requirements
4.30
One particular problem related to regulation concerns the structure of
licensing regimes for truck drivers. For younger drivers, there is a disjuncture
between the age at which prospective drivers are able to obtain different types
of licenses, and therefore be eligible to drive, and the age at which young
people become available to embark on careers in the industry.
4.31
Typically, young people of around 16 or 17 years may consider a career
in driving on completing or nearing completion of high school. However, the
minimum age at which a person can obtain a light rigid or medium rigid license
is 18 in New South Wales and Queensland, and 19 in Victoria; and in addition,
the person must have held a car license for at least 12 months. To obtain a
more advanced license, for example a multi-combination (MC) license, a person
must have held the various less advanced license types for at least 12 months
each, meaning the minimum age at which a person can obtain a MC license is 21
in New South Wales and Queensland, and 22 in Victoria.[22]
4.32
The type and volume of freight which is carried by road, especially in
rural Australia, is such that MC licenses are most sought after. However, the
nature of the licensing regime means that not only are there far fewer MC
licensed drivers and trucks available in rural areas than there is demand, but
that those young people who may be interested in upgrading less advanced
licenses are unable to do so due to lack of opportunity to accrue vehicle
experience.[23]
4.33
Witnesses and submissions to the inquiry highlighted two related
problems for employers associated with this arrangement. The first, linked
directly to the disjuncture between the age at which young people begin to
consider a career in transport and the age at which different license types
(and associated salaries) may be obtained, is that 'By the time most young
people have turned 25 and are able to drive vehicles in the transport sector,
they have already started a career elsewhere.'[24]
4.34
Related to this, the second problem for employers is the connection between
the licensing regime and driver insurance premiums. High excesses placed on
drivers under the age of 25 are a significant disincentive for employers to
engage young people in a driving capacity,[25]
particularly for the small owner-driver businesses which make up the majority
of the road transport industry. However, without the opportunity to gain
practical experience as a driver before the age of 25, workers can not hope to
be able to obtain a full MC license until sometime in their late 20s or early
30s; by which time many have certainly moved into other employment fields with
more attractive career path options. This problem is made worse for employers
by the genuine need to be confident that drivers are capable and competent to
manage expensive equipment:
The barriers created through the graduated licensing system and
insurance are integral to drivers failing to move up through the license
classes however in addition employers are seeking a minimum of two year's
vehicle experience. The reluctance to employ inexperienced drivers in
understandable. A new prime mover can easily cost over $400,000 and trailers
over $100,000. A driver in control of a triple road train may be managing a
vehicle and freight combination in excess of a million dollars.[26]
Legislative framework
Chain of responsibility legislation
4.35
Some of the increases in regulatory requirements mentioned by witnesses
and submissions during the inquiry have arisen as a result of changes to
legislation governing the transport industry, both in individual jurisdictions
and more broadly. One of the most important of these changes relates to the
introduction of chain of responsibility legislation. At a national
level, Australian Transport Ministers approved a model bill in November 2003
(The Road Transport Reform (Compliance and Enforcement) Bill). This bill contains
provisions to ensure legal liability is imposed on all parties in the transport
and logistics chain who have responsibility for tasks where their actions may
result in an offence.[27]
State and territory authorities have subsequently developed individual
legislation to give effect to the bill in their own legislation.
4.36
The chain of responsibility legislation seeks to spread legal
responsibility for unsafe practices in the transport industry beyond drivers
only, who have traditionally borne the brunt of liability. Under the regime,
all parties with control over the operations of the vehicle have residual legal
responsibilities in the event of an accident. These may include primary
producers, miners, manufacturers, retailers, importers, exporters and tourism
operators.[28]
4.37
Many witnesses and submissions commented on the benefits of the chain of
responsibility legislation, recognising not only the inherent justice of a more
coherent legal approach, but also the practical benefits of the revised regime.
It was noted that even though the legislation has been implemented relatively
recently, particularly in some states, there is already evidence of satisfactory
effects on operations and business approaches. For example, the Victorian
Transport Association commented that:
We know that is having an impact on employment practices and, I
suspect, will have a continuing impact...they are taking their responsibilities
in relation to things like chain of responsibility laws very seriously. Whether
they are also running their own fleet, such as Woolworths, or whether they are
purchasing their freight transport needs, that are realising that they have
legal obligations that they need to take seriously.[29]
4.38
The committee was particularly interested to hear examples of
industry-led initiatives for voluntarily improving safety standards, prompted
and guided by the introduction of the new legislation. For example, the
Australian Logistics Council explained that a number of its key members
relating to the retail logistics supply chain, including Coles and Woolworths,
Toll, Linfox, the Australian Trucking Association, the National Transport
Commission, and the Transport Workers Union, have come together to develop a
voluntary code of conduct across a number of areas. These include:
...fatigue, load restraint, drug and alcohol policy, and so on.
That is being implemented. That is about creating a national minimum standard
against those safety areas to try and lift the safety standards of transport
and logistics in that particular supply chain; also to make is simpler to live
by the law.[30]
4.39
However, it does appear that while the chain of responsibility
legislation is having some positive effects, and is in principle accepted and
supported despite the extra regulatory requirements which some operators are
experiencing, there are some continuing concerns about enforcement of this and
other legislation. Some witnesses expressed the belief that policing
authorities need to take a stronger stand:
I can tell you who they are every night between Melbourne and Sydney,
and Sydney and Brisbane. They are the same trucks. Those blokes never get
penalised. You know the companies. You can pick the people who are doing
problematic driving hours and the people who are being asked to do extra
hours...(The chain of responsibility legislation) will create and is creating a
major difference. What we need is the policing authorities in the various state
governments around the country to enforce, as Queensland has with the
assistance of the TWU on some people who were strongly and badly doing the
wrong thing – to get stuck in.[31]
4.40
On balance the committee considers that changes to the legislative
regime, and in particular the introduction of chain of responsibility
legislation, in recent years have been positive, and necessary to improving
industry competitiveness and professionalism. There is evidence that some
operators are experiencing challenges in ensuring compliance with this legal
framework, but given the relatively recent introduction of legislation, and the
general goodwill supporting it, it is worthwhile giving attention to ways in which
these may in time be remedied.
Maritime legislation
4.41
Legislative issues for the transport industry were also raised in
relation to sectors not immediately affected by the chain of responsibility
legislation. In particular, the committee heard evidence from stakeholders in
the maritime transport industry about problems with laws governing income tax
of Australian seafarers, which may be putting them at a serious disadvantage.
This could affect the attractiveness of the industry as a career option.
4.42
The Maritime Union of Australia, the Australian Maritime College, and
the Australian Shipowners Association all commented on this problem, which
relates to interpretations of 'foreign service' in section 23AG of the Income
Tax Assessment Act 1936.[32]Interpretations of the meaning of 'foreign service' in this legislation by
the Federal Court have resulted in Australian seafarers being exempt from
paying domestic income tax only where they are engaged in shore-based foreign
service. Exemptions do not apply to seafarers where they are engaged on foreign
vessels and required to traverse the high seas.
4.43
As the Australian Maritime College noted, this is in contrast to
arrangements for seafarers from other OECD countries, where concessionary tax
arrangements do apply to those working on foreign vessels on the high seas.[33]
The consequence of this, as the Australian Shipowners Association explained, is
that:
...Australian seafarers (including trainees) are disadvantaged
when it comes to securing foreign employment. Australian seeking to work on
foreign vessels must either accept lower salaries (once Australian income tax
is paid) or negotiate higher rates than seafarers sourced from other countries.[34]
4.44
Given the challenges facing the maritime industry in terms of recruiting
and retaining seafarers,[35]
it seems reasonable to suggest that this is an area in which changes could be
made to improve the attractiveness of a career in seafaring.
4.45
The Maritime Union of Australia raised a further concern in relation to
coastal shipping legislation, related to cabotage law and practice. The
committee heard that current cabotage laws in this country (unlike those in
many other countries) do not require vessels trading on the Australian coast to
be Australian flagged, nor to carry Australian seafarers, nor that the vessel
be built in Australia. The Union submitted that the result of this is that:
...the Australian coastal zone is effectively annexed from
Australian sovereignty such that Australian law does not apply in the
Australian coastal zone, even in Australian territorial waters. This allows
vessels to trade along the Australian coast completely exempt from Australian
industrial laws including workers' compensation and OHS laws, exempt from
aspects of taxation law and customs law, exempt from immigration law and exempt
from ship safety and environmental law.[36]
4.46
It appears, therefore, that there may be wide variations in employment
regulations and legislation applying to the many ships and seafarers operating
in Australia's coastal waters, and that this may contribute to an unstable
industrial environment in which it is difficult for Australian seafarers and
maritime stakeholders to manage strategies to attract and retain suitable
skilled workers.
Recommendation
Recommendation 6
The committee recommends that section 23AG of the Income
Tax Assessment Act 1936 be reviewed, and the meaning of 'foreign service'
for income tax purposes be clarified so that Australian seafarers are not
disadvantaged in their earnings capacity relative to seafarers of other nations
when working on foreign-flagged vessels on the high seas.
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