Background
3.1
Mining is Australia's largest industry and currently accounts for 10.4 per cent of Gross Domestic Product (GDP). The industry directly employs approximately 256 000 people in highly skills jobs, mostly in regional and remote Australia, and employment in the sector has trebled over the past two decades, up from only 79 000 workers in 2001.
3.2
Research suggests that, taken as a whole, the mining industry and its associated supply chains support approximately one in ten Australian jobs, and that the industry's ongoing expansion has made Australian households approximately $14 800 better off financially in 2020 than they otherwise would have been. The industry also promotes professional learning and development, with figures showing that the industry added an additional 1 000 apprentices and trainees during 2020, and that it provided commitments to do more in future years.
3.3
Jobs within the mining sector commonly pay higher than the average across the economy, and deliver significant economic benefits for the communities in which workers reside. The mining industry has traditionally provided substantial employment opportunities for Australians living in regional and remote areas; however, increasingly the sector is relying on fly-in-fly-out (FIFO) and drive-in-drive-out (DIDO) workforces and the engagement of contractual and labour hire staff to administer their facilities.
3.4
Inquiry participants raised a number of issues with this trend, highlighting some of the negative impacts on the workers themselves as well as the regional communities in which they work and operate. This trend and the resulting impacts are discussed in further detail in this chapter. The chapter concludes with proposals for reform which aim to address, or at least mitigate, these issues.
The trend towards labour hire and casualisation in the mining industry
3.5
It was argued during the inquiry that there has been a marked increase in the utilisation of labour hire contractors and casualisation in the mining industry over the last twenty years. This is supported by the findings of the Queensland Coal Mining Board of Inquiry, which said in its final report:
Research from 2007 into the rise of temporary employment arrangements in Queensland coal mines revealed that, in 1996, direct employment accounted for 94.1% of the overall workforce at open cut mines in the central and northern coalfields in Queensland… Data from the Commissioner for Mine Safety and Health revealed that, by 2017, there were more contractors than direct employees in Queensland coal mines.
3.6
Isaac Regional Council Mayor Anne Baker said she believes the scale of labour hire in the Isaac Region may be even higher:
The feeling on the ground is that it's almost an 80-to-20 rule. I was around in 1996 and I have no doubt that 94 per cent of the workforce had permanent positions with permanent shirts and they worked beside people on equal pay. Today I have absolutely no doubt in my mind that it is far, far less. The majority of the workforce are on casual employment, less pay and, absolutely, less conditions. The safety on our mine sites—around accidents, deaths, explosions, fires—is on a downward spiral.
3.7
Mr Wayne Goulevitch, a mining equipment operator working within Central Queensland for a multinational corporation, provided his personal experience over the last decade:
I started out like everyone did back in my day, as a labour hire employee. I worked for nine months as a casual before getting a full-time gig. Back then, pre-strip crews were made up of 40 full-time employees and about five labour hire workers. Labour hire workers at the time were being used [as] supplemental labour to backfill full-time employees away on holidays, off sick or maternity leave. This is, I believe, justifiable and acceptable use of casual labour. But somewhere along the way a decision—or lack of decision—meant that, within 10 years, labour hire had ballooned to about 120 workers while full-time employees remained around 40. Clearly, when casuals outnumber full-time employees two to one, 'supplemental' can no longer be used to describe labour hire. My crew has not had a full-time employee join our team in over seven years.
3.8
Prior research also suggests that a systemic transition to less secure working arrangements is occurring. For example, a 2020 report published by the McKell Institute (McKell Report) submitted that, based on the ABS Characteristics of Employment Survey, growth in the casualisation in the mining industry between 2014 and 2018 exceeded that for all other industries, and was over 59 per cent. The report argued that, although these workers sometimes perform specialist roles, they generally do the 'same work on the same rosters as permanent employees but with lower wages and on a casual basis with no paid leave or job security'. It articulated this further:
Instead of earning more to make up for the lack of entitlements, casual mineworkers usually earn at least a third less than permanents, even with their casual ‘loading’. This is because labour hire companies – at the direction of mine owners – set pay rates at just above the Black Coal Industry Award minimum, whilst the rates under enterprise agreements that apply to permanent employees are reflective of multiple rounds of collective bargaining as well as the tough working conditions in coal mining.
3.9
The Australasian Centre for Corporate Responsibility (ACCR) stated that labour hire workers constituted a 'staggering proportion' of workers in some industries, and quoted evidence indicating that, since 2012, many domestic mining operators have moved to a predominantly labour hire workforce with the aim to reduce overheads and increase flexibility. In support of this, it submitted that in 2017 Rio Tinto announced that it would only use labour hire workers in its iron ore operations, and that research undertaken by Deloitte indicated that, in the two years to 2019, 88 per cent of new hires at BHP were labour hire and 50 per cent of new workers at Fortescue Metals Group were indirect hires.
3.10
The Minerals Council of Australia (MCA), however, put forward a different viewpoint. In its submission to the inquiry, the MCA stated the following:
The Australian mining industry has a high share of permanent and full‑time employees. 84 per cent of mining workers are permanent employees, compared to 78 per cent for all industries. 96 per cent of mining workers are employed full-time, compared to 68 per cent for all industries.
3.11
The MCA contended that different companies employ different combinations of 'employment types', and that:
… [t]he small percentage of casuals or labour hire (who may be employed on a permanent or casual basis by a labour hire agency) ultimately serve to manage the cyclical, geological or maintenance waves and ensure the ongoing viability of operations.
Some companies will use labour hire, others will create specialised teams of permanent employees that target specific safety and productivity projects.
3.12
The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) noted that the rate of casualisation in the mining industry is currently disputed, and highlighted the significant discrepancies between the figures quoted by the MCA and the 'lived experience' of its members:
While the Minerals Council cites ABS data that has it at 16%, it is the lived experience of members of this union that casual labour hire is easily around 30% of all coal mining jobs in New South Wales and is routinely over 50% in Queensland. The reason for this discrepancy between the official data and lived experience is not known. One possible reason is that casual labour hire in mining may not be classified by the labour hire providers as work in the mining industry.
3.13
Based on what he sees happening on the ground each and every day, the District President of the Mining and Energy Division of the CFMMEU (Queensland District), Mr Stephen Smyth, supported the assertion that at least 50 per cent of Queensland coalminers were engaged on a casual basis. In his evidence to the committee he noted the following:
We're aware of some mines that have total labour hire employment of over 450 employees at a mine, and the only permanent people there are people in senior management. From our perspective, we rely on what we see on the ground, and the evidence and the stories coming from our members and non-members, and workers in general. I'm unsure as to where the Minerals Council got their numbers from, but on the ground the percentage is increasing. In my 33 years, I've seen it move from where labour hire was used in peaks and troughs and specialist work, to now where it is the employment of choice for a lot of the employers.
3.14
There was also some concern amongst inquiry participants that measures undertaken by mining operators may hide the real extent of labour-hire, or labour-hire equivalent, arrangements within the industry. This development is discussed in further detail in the case study below.
Box 3.1: Case Study: BHP Operations Services—Equivalent to labour hire?
In 2018, BHP created two Operations Services entities within the BHP Group to employ workers directly. BHP submitted that these entities 'were created as a way to provide increased permanent employment within the BHP Group, with a strong employee value proposition'. In his evidence to the committee, the Vice President of Operations Services at BHP, Mr Matthew Furrer, articulated BHP's approach as follows:
Our strategy has been a little bit different. We have gone out of our way to grow an internal production and maintenance services capability quite deliberately, and we've now brought on 4,000 permanent employees through the growth of that. That has been a very deliberate activity that has been run on a national agenda to build up that skill set. Those people have come from the marketplace, so people have been free to apply to come and join us in operation services. We have been thrilled to see just how many people have chosen to do that. We have had 95,000 applications through that channel, coming from all sorts of places.
BHP told the committee that, subsequent to the creation of its internal labour hire company Operations Services, just 48.16 per cent of its Australian minerals workforce is directly employed by BHP. Across its national coal operations, that drops to just 29.11 per cent.
In stark contrast to BHP's description, however, the McKell Report took a different perspective, characterising the development at BHP as follows:
In a new twist on this [labour hire] model, BHP has set up a fully-owned subsidiary with a view to bringing its outsourced labour hire workforce in-house. While the jobs are promoted as ‘BHP’ jobs, they are paid at rates in line with labour hire contractors, not direct employees. While these lower wages clearly have a direct impact on the workers whose remuneration is reduced, and their families, the widespread use of lower‑paid labour hire workers has spill-over effects that are felt more widely in the local community.
The McKell Report went further:
These entities submitted two proposed non-union enterprise agreements to the Fair Work Commission, with pay rates of $30,000 to $50,000 a year less than current site agreements, and no pay rise over their four-year term among a host of inferior conditions.
Operations Services marketing has focused on the jobs being permanent, not casual like most contract labour hire, and therefore attracting annual leave.
Nevertheless, the jobs attract substantially worse conditions in a number of other areas including no accident pay, incentive bonuses that are prohibitively difficult to attain and no payment for transport including FIFO flights[.]
Notwithstanding the above, Mr Furrer argued that pay rates at Operations Services were 'very healthy' and that permanent employees were getting paid in excess of $100 000 per year. He contended that there was no simple comparison between pay rates as follows:
In no way is the pay that we give to an individual a simple comparison. There are so many variables that go into what people get paid working for the company. We've got such a range of environments where people are working under all sorts of different arrangements and agreements. I think we've got 23 enterprise agreements on foot today working in all sorts of different locations and different environments. It's not a simple thing in any way, shape or form to have a single comparison of what one gets paid to what another gets paid. There are a lot of variables in there.
The National Secretary of the Australian Workers' Union (AWU), Mr Daniel Walton, also commented on the broader trend to, what he described as, 'in-house labour hire firms'. On this he said the following:
We often see employers going to the length of establishing in-house labour hire firms to put their own workers at arm's length, and we've seen many, many cases of misuse of labour hire where workers who are working side by side with existing workers on those sites unfortunately don't share the same level of job security or benefits that are in place.
Key concerns raised with labour hire and casualisation
Lower pay and conditions than directly employed workforces
3.15
Employers and unions agreed during the inquiry that labour hire workers receive lower pay and conditions than those employees who are directly employed. For example, the Queensland Council of Unions (QCU) submitted the following:
Labour hire is also a form of insecure work, given that often workers engaged as labour hire are not paid at the same rate as the permanent workers whom they work alongside of, and who often work on a casual basis with limited recourse compared to permanent employees if their employment comes to an end. The use of labour hire in Queensland to drive down wages and conditions is a workplace trend that has an associated impact on employment arrangements such as in the mining sector of the Queensland economy.
3.16
In her evidence to a prior inquiry undertaken by the Senate Education and Employment Legislation Committee, the Chief Executive Officer of the Minerals Council of Australia, Ms Tania Constable, acknowledged that there was, overall, a 'premium for permanent employees of about 24 per cent in some companies', in comparison with labour hire workers.
3.17
Notwithstanding the above, the Minerals Council of Australia did not see this as a major issue. In its evidence to the current inquiry, it argued that workers are highly paid and the 'vast majority' of them are permanently and full-time employed.
3.18
When asked how the average pay of a casual labour hire employee compares to a permanent worker, the District President of the Mining and Energy Division of the CFMMEU (Queensland District), Mr Stephen Smyth, said the following:
It can vary but it can be anywhere up to $10,000, $20,000, $30,000. It depends on the labour hire company. It depends on who is their client, whether it is a major multinational like BHP, Glencore or Anglo, or a second-tier company, which may not pay the same conditions and entitlements as the bigger miners. It does vary across the board in Queensland, which has over 60 coalmines. That is the monetary aspect, but there are also the health and safety implications and the other conditions and entitlements that go with it.
3.19
The Head of Human Resources at Anglo American Australia, Mr Warwick Jones, also provided evidence on the variability of pay rates between directly‑employed permanent employees and labour hire workers:
All I can say is that the variability of pay rates between our permanent employees and those employed in labour hire vary from plus five per cent to minus 22 per cent. That's the range, if you like, if I plotted all of the different occupations and salaries that apply. We have some that are paid slightly more and we have some that are paid up to 22 per cent less; that is the range in our business. I'm not sure what exists elsewhere, but that's what I can say for Anglo American.
3.20
Despite the Minerals Council of Australia and Anglo American Australia both being able to provide estimates of the pay gap between direct employees and labour hire workers, BHP declined to provide an estimate or any data on three separate occasions in response to this question. The committee found this particularly surprising given that the labour hire entity in question, Operations Services, is a wholly-owned subsidiary of BHP. While BHP was not willing to divulge this information, it has been previously reported:
In 2018, BHP created two $1 shelf companies to act as employing entities, including Operations Services (OS). These entities submitted two proposed non-union enterprise agreements to the Fair Work Commission, with pay rates of $30,000 to $50,000 a year less than current site agreements, and no pay rise over their fouryear term among a host of inferior conditions… At Mount Arthur, Operations Services workers are being paid $106,000, compared to the rate in the union agreement of $159,200. This pay discrepancy is similar at other mines where OS has been deployed.
3.21
When asked whether directly-hired workers at mine sites were paid higher than those engaged indirectly through his firm, the Managing Director of One Key Resources, Mr Lewis, said the following
It is a difficult question in the sense that we obviously do not have transparency or visibility over what our clients pay their permanent workers. Given that we operate on over 60 different sites across Australia, one size does not fit all in terms of an answer on that. What I can say is that our rates of pay within our business—and I have done a quick analysis prior to appearing here today—the average of the One Key annual earnings, which includes casual, permanent, fixed term, and every other engagement style, is over $120,000 per year. If we [weren't] paying appropriate wages we would not be able to attract and retain our workforce and would obviously experience significant churn having to rehire all the time and things like that.
3.22
In addition to potential wage differences, it was argued that labour hire workers are also employed under inferior workplace conditions. For example, the McKell Report contended that labour hire workers were missing out on basic workplace entitlements, such as sick leave and family leave.
3.23
Noting the significance of coalmining to his local region, Mr Arthur Rorris from the South Coast Labour Council said the following regarding the continued trend towards the engagement of labour hire firms and the impacts it is having on wages and conditions:
There is no excuse for big multinational companies to be rolling over workers on questionable pay rates, through body hire firms, year in, year out, and then undercutting them each time they do that effort. You've got a series of body hire firms now that essentially trade on being able to constantly undercut wage rates. We have workers who are sacked one day and rehired at the next, doing exactly the same job, with less money and worse conditions. It's bad at the best of times, but, when you're looking at an industry that is actually capitalised to the extent that it is, labour costs are really a fairly insignificant part of that cost structure, and there is no need or justification for that action. We came to the conclusion that it's actually about control and it's blind ideology, with a lot of these fads. The HR people, particularly in the multinationals, think it's a good idea that you keep that insecurity going. Trading on insecurity is a feature, unfortunately, of some of these firms within the coal and other industries. That has got to stop.
3.24
Councillor May highlighted that insecure work can have detrimental impacts on a person's ability to plan for their long-term future:
Having a casual or a contract position within the resources sector, or any sector for that matter, makes it just that little bit harder for people to be securing home loans, personal loans and those types of things. It's a ripple effect as to what the impacts are in our community.
3.25
The General Secretary of the QCU, Mr Michael Clifford, discussed the short‑term impacts of insure work, noting that these arrangements can even negatively impact a person's ability to plan a simple weekend away:
We heard, again, from [labour hire] workers who talked about the difficulties in planning their lives, not just planning their lives for the long‑term but even planning a weekend away with their family, because they have no certainty around the hours that they work.
3.26
A number of current and former miners provided their perspectives on the changes occurring within the industry. For example, Mr Rob Foot, a retired miner who previously worked in Central Queensland, provided his perspective:
I'm retired but I was working in Central Queensland mines under permanent working conditions. I was working for United Group Resources. I worked for the firm for 14 years, and one day the mines came along and said every contractor onsite had to work for WorkPac. These people wanted to reduce my wages by half, and on a casual basis. You had to pay for your own inductions, you had to pay for your own medicals, you had to pay for accommodation, and you had to pay for training courses, safety and trade certificates, riggers-dogmen courses, crane tickets, high-risk tickets, heights training certificates, forklift truck, confined space et cetera, whereas in the past that was all supplied by the employer. As a consequence, they wanted everyone to be casual with a flat rate of pay—no holiday pay, no sick pay, no overtime, no travel pay.
3.27
Mr Stokes, a pump crew operator working within the coalmining industry for the last ten years, said the following about the differences in working conditions:
I have worked in the coalmining industry for 10 years as a pump crew operator. For the last seven years I have been a casual labour hire worker. I live in Rockhampton with my wife and children and work at a Central Queensland coalmine operated by a multinational company. I have been in labour hire all these years, for seven years, and there are just no permanent jobs being offered anymore. I work the same roster and shift as the permanent workers on my crew, but I have no job security. I get paid less, and it is really hard to take time off. I want to see the same pay implemented for labour hire workers. Most importantly, I think the mine operators should directly employ more workers. When you are in labour hire, you are treated like a second-class citizen, you are given the worst jobs and you can be let go at any time. At my coalmine, more than half the workers are employed through labour hire rather than being directly employed. Mining companies keep changing labour hire companies so that workers do not have an opportunity to organise and improve their position.
3.28
Commenting on the rationale mining operators submit for utilising labour hire, Mr Walton from the AWU said the following:
Employers usually say that labour hire needs to be used because it's flexible and it allows them to fill specific skills shortages, but that's not necessarily the practical reality of what's playing out on the ground. More often than not, we see labour hire used as a way of preventing workers from having access to the same pay and conditions that other workers on the site have under existing enterprise bargaining agreements.
Negative economic impacts for regional and remote communities
3.29
Largescale mining operations have the capacity to deliver huge economic dividends to local communities, especially in regional and remote Australia. These benefits have traditionally been realised through each of the development, construction and production phases; however, with the increased rate of casualisation and the engagement of FIFO and DIDO workforces, some of these benefits for local communities have been negated. Dr Stephen Whelan, a labour market economist at the University of Sydney and the author of the McKell Report, stated that:
An increasing reliance on casual workers and labour-hire has created a situation where many workers in Australia’s mining sector are missing out on basic workplace entitlements, such as sick or family leave. Because of these labour-cost reduction strategies, job insecurity has risen in the mining sector, undermining the sector’s value to individual workers, as well as the regional economies dependent on mining activity.
3.30
The McKell Report estimated that across just three major coalmining regions, the losses resulting from these arrangements could range from $485 million to $851 million per year, and that, if similar arrangements were in place across other mining regions, such as the Illawarra and Central West, the losses could approach $1 billion per year. The report provided a further breakdown by region:
For the local economy, the consequences are likely to be substantial. The first case study, The Hunter Valley excluding Newcastle, identifies an impact of between $158 million and $283 million as a result of labour cost reductions in the mining industry. In the Bowen Basin region of Mackay‑Isaac-Whitsunday, a loss of between $169 million and $297 million is identified. In the SA4 Central Queensland region, this report identifies an economic cost of between $140 million and $245 million as a result of labour cost reductions in the mining sector.
3.31
Mrs Cherie Miller, Chairperson of the Moranbah Community Health Partnership, also described the impact growing labour hire and job insecurity has had on the mining town of Moranbah, including increasing rates of domestic violence and drug abuse:
When I'm out delivering courses and speaking to people for four hours, it certainly is around topics that are very sensitive around that concern of job security and their husbands or partners security and their position. It's around the social determinants of health. If they lose their job, will they become homeless? Do they have a home within their job? It is a very complex issue, but it certainly all comes back to the fact that there is job insecurity in our community, the wider region and across Australia.
3.32
Mrs Anne Baker, Mayor of the Isaac Regional Council, added that there is a 'casualisation pandemic' in the Isaac region:
We're very, very aware of the mining operations' increasing preference to favour the labour hire model to meet their requirements over moving back to the more permanent model which we saw some time ago. It is our view— and it is certainly my view, as the mayor of this region, in my fourth term—that this is nothing short of a pandemic. We talk about a COVID pandemic. We are actually living a casualisation pandemic … There can be absolutely no mistake that this completely undermines the socioeconomic health of our regional and remote communities and is an offensive insult that continues to be allowed to happen.
Increased fly-in-fly-out and drive-in-drive-out workforces
3.33
Where mining operations do not rely on FIFO and DIDO arrangements, they can contribute materially, both directly and indirectly, to their local economies and to the Australian economy more broadly. These contributions can come in multiple forms, such as:
providing employment to people living in regional and remote Australia;
bringing in workers who spend money within the local community;
purchasing goods and services from local suppliers;
making voluntary social investments, such as infrastructure projects and scholarship programs; and
paying taxes and royalties to various levels of government.
3.34
The boom within the mining industry over the last two decades has made it necessary for organisations to recruit workers from outside the regions in which they will be employed. This is especially true for operations located in remote locations, or on oil rigs, which cannot be practically serviced without 'temporary periods of isolated on-site work'.
3.35
In its submission to the inquiry, the AWU submitted that:
Even where it is not strictly necessary, many mining operations have a workforce composed entirely of workers from outside of the local region. Typically, rosters for these sites have workers on site for weeks at a time, then off work entirely for a period.
3.36
Notwithstanding the above assertion, the Managing Director of One Key Resources, Mr Ben Lewis, contended that his organisation's preference was to 'employ locally first'. On this point he said the following:
Our preference when employing a workforce is always to employ locally first. Obviously that has economic and community benefits in the local area, but it also demonstrates that we are committed to working within the communities where we have sites and employees. Of interest, and I'm not sure if it's a differentiator or not but, given that focus on local employment, over 82 per cent of our workforce is employed from the local regions around the mine sites where we work, and that includes our employees in Western Australia, which, obviously, is a far more FIFO heavy marketplace given the remoteness of the mines. That's a whole-of-business stat and is something that we're quite proud of and work with the communities on.
3.37
The foreword to the 2013 report prepared by the House of Representatives' Standing Committee on Regional Australia, entitled Cancer of the bush or salvation for our cities?, noted that the then Mayor of Kalgoorlie, Councillor Ron Yuryevich, referred to FIFO/DIDO as the ‘cancer of the bush’. The report submitted that he had claimed, and many others had agreed, that it was eroding the way of life in traditional mining communities, such as Kalgoorlie, Karratha, Mount Isa, Broken Hill and Moranbah.
3.38
The 2013 report also contended that:
FIFO/DIDO should not be utilised as the primary work practice where it undermines the liveability of regional Australia. In some areas liveability is becoming so eroded that the choice to ‘live-in’ rather than FIFO/DIDO is simply not available. Concerns were expressed throughout the inquiry that FIFO/DIDO would become such a norm that future generations would not realise that the option of living in regional Australia is available to them.
3.39
Although noting that many workers appreciate the career opportunities made possible through this work, the AWU highlighted that these arrangements create a number of significant problems for both the workers themselves and the local regions in which they operate:
[T]he significant time away from family and friends can create significant strain on these relationships and on the mental health of workers. Countless stories have emerged of drug use and family breakdown that have resulted from employers failing to look after their workers.
Further, reliance on FIFO work can foment opposition to resources projects in nearby regional towns. Many of these towns see hundreds or thousands of workers ferried in and out of worksites, without seeing any economic benefit. Indeed, in some cases, workers in towns near projects need to travel to capital cities to take up work. Given the precarious economic conditions in many regional centres, exacerbated by declines in tourism from the COVID-19 pandemic, this is likely to have significant knock-on effects. A workforce entirely composed of non-residents is also less likely to be aware of local issues, potentially exacerbating the risk of failing to understand local concerns.
3.40
Other witnesses also highlighted some of their major concerns they have with this approach. For example, in his evidence to the committee, Dr Stephen Whelan put the problem in simple terms:
The easiest way to think about it would be that those fly-in fly-out workers would take the income that they earn to other parts of the country, to other regions. It wouldn't be spent in the community where the mine is actually located. So if anything that would mean that the impact was even larger in terms of the direct and indirect effect of any employment arrangement, I suppose, because that income would be spent outside of the region where the mine is.
3.41
The Deputy Mayor of the Mackay Regional Council, Councillor Karen May, discussed the significant change in approach since the 1990s, and outlined the issues this has caused for her local region and the pressure it has put on the council:
I think there is also the cost of that casual workforce to community, particularly if they're a fly-in fly-out workforce. Our communities and our neighbours in the Isaac area are providing and supporting those costs through infrastructure, but there's no return on investment through rates to be able to pay for that. So it's almost like a cost-shifting exercise to the local council because we've got these workers who are not permanently employed and just fly in and fly out or drive in and drive out. There is a bit of a disparity, really, in that very complex issue around who should pay for what. I think the job security part—and I remember only too clearly what it was like in the 1990s in the resource towns. They were booming, thriving, great family towns, and if for any reason we can push back towards that rather than casualising more, I think you will see a lot better outcomes for communities, families, small business and a whole range of flow on effects: education facilities, health facilities. It is around really making sure of the cost and encouragement to business, or to industry, to really think about employing people on a permanent basis rather than shipping them in and shipping them out.
Reduced occupational health and safety
3.42
In its final report, the 2015–16 Victorian inquiry into the labour hire industry and insecure work (Victorian Inquiry) noted the there is a significant body of literature indicating that labour hire workers are subject to greater risks to health and safety than directly employed workers.
3.43
In another report, prepared by Emeritus Professor Michael Quinlan for the recently concluded Queensland Coal Mining Board of Inquiry, a summation of the key negative health and safety outcomes associated with contracting; labour hire; and other contingent work arrangements, when compared to full‑time permanent positions, was provided. The report noted that research had identified that these insecure arrangements resulted in:
higher frequencies of injuries, including fatalities;
poorer physical and mental health;
poorer knowledge of, and access to, regulatory employment rights; and
less willingness for workers to raise occupational health and safety concerns.
3.44
In his report, Professor Quinlan went further:
Importantly, the use of contract labour/subcontracting has also been linked to workplace disasters in a number of industries by official investigations, or detailed research. The use of contractors and especially multi-tiered subcontracting has been associated with fractured OSH [occupational safety and health] management and corner cutting on safety that was a causal factor in catastrophic incidents.
3.45
One such incident involving labour hire contactors occurred at the Grosvenor coal mine in Queensland on 6 May 2020 where five workers were seriously burned. This catastrophic event is discussed in further detail in the case study below.
Box 3.2: Case study: Grosvenor mine incident and subsequent inquiry
3.46
On 6 May 2020 there was a catastrophic incident at the Grosvenor coal mine at Moranbah in central Queensland's Bowen Basin. This incident involved two forceful pressure waves and an underground methane explosion.
3.47
At the time of the incident there were five coal mine workers at the tailgate end of the longwall, with three of the workers as far away as 260 metres from the maingate. They were 390 metres underground. All five workers suffered serious injuries, such as burns to their upper bodies and airways.
3.48
Although operated by Anglo American, at the time of the incident One Key Resources, a labour hire firm, supplied 'almost the entirety' of the production workforce.
3.49
In the aftermath of the incident, the Queensland Coal Mining Board of Inquiry was established by the Queensland Government to undertake a thorough investigation. The foreword to the final report of this inquiry described the incident as follows:
Unquestionably, the event was terrifying. There were two forceful pressure waves 15 seconds apart, sufficient to knock a person over. Without identifying the exact order of things, in the course of the tumult, the power dropped and there was a brief but intense methane explosion at the tailgate end of the longwall.
Each of the five workers was seriously burned. The only lighting then available came from the workers’ cap lamps.
Notwithstanding their condition, they made their way, helping each other where they could, towards the maingate. Their courage and resilience is inspiring.
Workers at and near the maingate experienced the force of the two pressure waves involved in the event. They had not previously experienced pressure waves of this magnitude.
There was soon the call for help from the injured.
These workers were left in no doubt that a serious incident had occurred, and a potentially very dangerous situation still existed.
They immediately headed towards the area of danger, not away from it. Some went onto the longwall face and assisted the injured back to the maingate. Others were at the maingate providing first aid and comfort to the injured before their evacuation. Still others assisted with their evacuation. Each was exposed to potential danger.
3.50
Mr Wayne Sellars, one of the five workers injured during the incident, likened the explosion which engulfed him to 'standing in a blowtorch'.
3.51
It was also revealed during the subsequent inquiry that there were 14 reported 'near misses' at the Grosvenor mine in the eight weeks leading up to the explosion. The Board found that there was a perception amongst labour hire workers and contractors that raising safety concerns may endanger their ongoing employment. In its final report, it said the following:
The Board’s conclusion is that there is a perception among coal mine workers that a labour hire worker or contractor who raises safety concerns at a mine might jeopardise their ongoing employment at the mine. It has not been possible to assess how widespread that perception might be. However, the existence of a perception, no matter how widespread, creates a risk that safety concerns will not always be raised.
3.52
Responding to questions by the committee regarding the steps taken by One Key Resources to ensure that another incident like this never occurs again, the firm's Managing Director, Mr Ben Lewis, said the following:
In terms of that incident, it's a complex situation, as I'm sure you're aware. Certainly we have an obligation to protect the safety of our employees and we discharge that to the fullest extent through every possible means. Obviously there are certain mandated areas of responsibility, by virtue of the Coal Mining Safety and Health Act [Coal Mining Safety and Health Act 1999 (Qld)], which ultimately places the systems of work and the safety standards applying to those systems of work with our end client. However, we work in very close partnership with them, and, as a result of that incredibly unfortunate event, we have improved a number of communication lines and made a number of improvements around fully informing ourselves through risk assessment and more deep-dive periodical reviews to ensure that we're more across some of the technical aspects of the mining process.
3.53
Anecdotal evidence on occupational health and safety issues was also provided during the inquiry. For example, Mr Chad Stokes, a member of the CFMMEU, stated that he had witnessed numerous occasions where people had been adversely affected after raising safety issues over the seven years he had been working at his current mine site:
The labour hire workers stood their ground, saying it's totally unsafe, whatever it might be—the equipment or something where you're doing your work—and I've seen them moved to other crews or they've been laid off. Being in a smaller group, we hear all that. They've been moved because of, basically, standing for a safety issue. It's appalling—especially when you see it's [a] genuine safety issue, not a personal vendetta—and it's happening quite regularly now. I don't know if that's because of—the employment in the mining industry is just labour hire, so it's very sad.
3.54
Mr Ben Lewis, however, rejected suggestions that labour hire employees are less likely to voice safety concerns at their place of work:
From my experience, which is quite extensive in the labour hire space—and it's also a hands-on experience, because I do get out to site a fair bit—that is certainly not the experience that I've seen. In fact, the One Key workforce I would classify as quite vocal in terms of airing concerns, if there were any. Similarly, I've heard from all our client-facing and workforce-facing staff members that there is certainly not a hesitation to bring forward any safety concerns. That is very much welcomed by our business. Obviously, safety is of paramount importance, and any concerns that are raised are investigated, addressed and dealt with in an appropriate manner. There is never any retribution or threat of retribution or even a hint of it. In fact, we often conduct reward and recognition-type exercises for people proactively bringing forward any concerns they may have.
3.55
The Chief Executive Officer of Chandler Macleod Group, Mr Peter Acheson, provided an insight into the 'shared responsibility' model between his firm and his clients, and outlined the safety induction process which his firm requires all employees working at mine sites to undertake:
The first thing that we do, which is very important, is undertake detailed safety induction for any employee starting work at any of our mine sites. We don't allow them to start until they have completed that safety induction. They're also required obviously to get the coal board medical et cetera if they're working on a coal site. Invariably there will be client site role specific inductions as well. If they're using a piece of equipment or operating a piece of machinery, part of that induction will involve how to use that machinery and making sure that they are using that machinery effectively. There is also a work area familiarisation and skills check on their first day on-site. And then, very importantly—this is a very important part of our role—we also make sure that the client undertakes the safety induction as well of this candidate. That's what I'm talking about when I talk about the shared responsibility. It is very clear in most work safe legislation around the country that there is a very clear shared responsibility between us and our clients.
3.56
Notwithstanding the above, the Australian Council of Trade Unions (ACTU) argued more broadly that there is significant evidence showing that 'insecure work is not safe work'. It contended that:
Workers in insecure work are more likely to be injured at work for a range of reasons, including inadequate training and induction, fear of reprisals for speaking out about safety concerns, lack of access to participation and consultation processes, lack of regulatory oversight, poor supervision, inadequate access to effective safety systems, and exposure to frequent restructuring and downsizing.
Proposals for reform and committee view
3.57
The committee believes there is something seriously and systemically wrong when more than half of BHP’s national mine site workforce is hired through labour hire and other external contractors, rising to more than 70 per cent at BHP’s Australian coal operations.
3.58
When even the Minerals Council of Australia admits that the pay gap for labour hire casuals to direct host employees is 24 per cent, and the CFMMEU says it is as high as 40 per cent, it is clear the plague of labour hire is not just about flexibility, but is about driving down pay and conditions for mineworkers.
3.59
A number of proposals have been suggested to address the key concerns noted above. These are discussed in further detail below, along with the committee's view and associated recommendations for reform.
Address issues with fly-in-fly-out and drive-in-drive-out workforces
3.60
The committee recognises the importance of mining developments in promoting the economic prosperity and workforce participation of local communities in regional and remote Australia. It is concerned, however, that as workforces become increasingly casualised and transitory through unnecessary FIFO and DIDO arrangements, many of these communities are no longer the main beneficiaries of these operations.
3.61
Although acknowledging that the boom in the Australian mining industry over the preceding twenty years has required mining operators to source workers from outside the regions in which they operate, the committee notes that evidence presented during the inquiry suggests that this commonly occurs even when local labour forces are available and could be engaged. The committee believes more should be done to ensure that this does not occur, and that local workers are utilised in the first instance when they are available and willing to work.
3.62
Numerous proposals and initiatives have been suggested and implemented to better understand, and mitigate against, the core problems created by these transitory work arrangements. For example, in 2013 the House of Representatives' Standing Committee on Regional Australia undertook a comprehensive inquiry into the subject and, in its final report, made 23 recommendations. Of these recommendations, the committee notes that only four were agreed to, either in‑principle or in‑full, by the Government. The balance were either noted or disagreed to.
3.63
Further, in response to a 2015 Western Australian Legislative Assembly report, in 2019 the Western Australian Department of Mines introduced the FIFO Code of Practice to address major mental health concerns which were becoming increasingly commonplace amongst these workforces. The committee wholly supports such initiatives designed with the aim of improving mental health.
3.64
The committee recommends that the Australian Government requires mining operators to conduct local labour market testing prior to engaging fly‑in‑fly‑out and drive‑in‑drive out workforces.
3.65
The committee recommends that the Australian Government requires mining operators to meet best-practice in managing the physical and mental health and safety of their fly‑in‑fly‑out and drive-in-drive-out workforces.
3.66
The committee recommends that the Australian Government commissions comprehensive contemporary research into the economic and health impacts resulting from mining operators utilising fly‑in‑fly‑out and drive‑in‑drive‑out workforces. Amongst other things, such research would assess the impacts on:
demand for services delivered by local governments;
the ability of local governments to raise revenues through taxation;
small and medium businesses located in towns located close to mine sites; and
the physical and mental health of workers and their families.
Improve occupational health and safety at mine sites
3.67
As discussed earlier in this chapter, it has been contended that labour hire and subcontracting has been linked to serious workplace disasters, such as the methane explosion at the Grosvenor coal mine in central Queensland in May 2020 where five labour hire workers were horrifically injured. The committee is very concerned that these arrangements result in 'fractured' occupational safety and health management and 'corner cutting' on safety, both of which are considered causal factors of catastrophic incidents.
3.68
Based on this evidence, the committee recommends that the Australian Government thoroughly investigates the extent to which labour hire workers operating within the mining sector are more reluctant to raise safety concerns due to fears of reprisal, with the aim of implementing effective safeguards for these workers to ensure that they feel secure in their ability to promptly raise these issues, either to their labour hire operator or host entity. This issue is discussed in a broader context in Chapter 2, with that chapter also incorporating the committee's associated recommendation.
Implement 'same job, same pay' principle across the mining industry
3.69
As already noted in Chapter 2, the committee is very concerned by the overwhelming evidence indicating that labour-hire workers commonly receive lower pay and conditions than those workers who are directly employed. Further, it appears that contracted labour is being utilised in the mining industry:
to undermine labour standards;
weaken, or entirely remove, the presence of union on worksites; and
as a substitute workforce that is seen as more compliant due to its temporary nature.
3.70
The committee believes labour hire has, and continues to, drive down wages and conditions across Australian mining operations. The committee notes that even the Chief Executive Officer of the MCA previously conceded that there is a premium of approximately 24 per cent for permanent employees in some companies.
3.71
The committee highlights research indicating that the estimated cost of contracting out, labour hire, and casualisation across just three Australian coalmining regions ranges from $485 million to $851 million per year, and may even approach $1 billion per year if similar workforces are utilised across additional mining areas.
3.72
To address this issue, the General Secretary of the QCU, Mr Michael Clifford, proposed the following:
I think there are a range of things that can be done. One is, particularly in labour hire, to ensure that we remove the incentive for employers to outsource their work to labour hire firms. Not only do these firms have over 90 per cent insecure work—over 90 per cent of people in casual labour—but also … often it's coupled with a significant reduction in wages. So policies like 'if you have the same job, you should get the same pay' are very important in that respect. If you're a casual worker working alongside a permanent worker then you should be getting the same pay for doing that job—that's one important policy.
3.73
Mr Smyth from the CFMMEU concurred with this proposal, stating to the committee in his evidence that the 'same work, same pay' principle should be the 'minimum' that workers in the coal industry have, along with their health and safety protections.
3.74
The committee would also like to draw special attention to the poor approach taken by BHP to internalise its labour-hire workers. The committee is astonished and disappointed that this large, and highly-profitable, multinational operator continues to argue the merits of its Operations Services entities, and refuses to acknowledge that its establishment was a thinly veiled attempt at the wholesale reduction of wages and conditions across its workforce.
3.75
If you exclude workers engaged by Operations Services, which the committee believes is a labour-hire like arrangement, evidence provided by BHP highlights that only 48.16 per cent of its Australian minerals workforce are direct employees. Astonishingly, this figure is even less, at only 29.11 per cent, across its national coal operations. The committee believes this is an unacceptable state of affairs, and calls on BHP, as well as any other operator considering embarking on a similar misadventure, to reassess their workforce approach.
3.76
The committee notes that the Isaac Regional Council suggested that the impact of non-fulltime employment on workers in mining-related industries be 'thoroughly investigated', with a focus on determining its effects on the ability of these workers to obtain home loans; their making of common family decisions, such as place of residence, schooling, and major purchases; and their mental health. The committee is very supportive of this proposal, and suggests that it be expanded to include all insecure and precarious arrangements.
3.77
This topic is discussed in further detail in Chapter 2. That chapter provides three key recommendations which the committee believes will promote parity between labour‑hire workers and directly-employed workers, and reduce the weaponisation of this form of insecure work as a means to reduce wages and conditions for Australian workers, including those hardworking individuals within the mining sector.
3.78
The committee recommends that the Australian Government commissions comprehensive research to determine the specific impacts of insecure employment on workers in the mining industry, with a focus on determining its effects on their ability to secure home loans; and on decisions such as place of residence, schooling, and major purchases; and their mental health.