RESOURCE PEOPLE Issue 008 | Spring 2014

Issue 008 Spring 2014

Secrets of Clough’s transformation Downer’s onsite succession coaching Fortescue boss rallies for reform

Ichthys LNG: Darwin’s crown jewel comes to life Thiess women a winning formula

PLUS mental health focus; industry awards; and Howard talks IR

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CONTENTS

REGULARS 04 | From the Editor 05 | Chief Executive’s message 56 | Business Partner Directory HUMAN RESOURCES 06 | Lessons from top employers 08 | Mining focus: navigating change 09 | 5 minutes with Elspeth Jeffery TRAINING & DEVELOPMENT 10 | Taking succession coaching onsite 12 | Industry to lead VET reform 13 | Get engaged 14 | Schoolkids get a taste for trades OHS & WELLBEING 16 | Resource employers lead income protection trend 17 | Rescue chopper an Australian first 18 | Mentally healthy workplaces less likely to suffer ‘sickies’ 19 | One in five under the influence at work 20 | Weighing up workplace wellness 21 | Orica launches new global incident software

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MEMBER NEWS 22 | Industry awards celebrate talent and diversity DIVERSITY 24 | Diversity by design 26 | Government extends support for e-Mentoring 27 | Georgiou and Gumala JV partnership grows 27 | Forrest’s Indigenous review to close jobs gap

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COVER STORY 28 | Darwin’s crown jewel comes to life POLICY 32 | Policy at a glance 33 | Restoring the rule of law with Nigel Hadgkiss 35 | Shell calls time on unproductive workplace laws 36 | Tugboat strike sparks Fortescue boss to rally for reform MIGRATION 38 | Visa furore hits the high seas 39 | Trades added to skilled occupation list

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CONTENTS

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LEADERSHIP 40 | Howard: workplace reform not finished 41 | New Bechtel boss eyes excellence 42 | Industry leaders tackle the transition INNOVATION 44 | ‘Four Pillars’ strategy turns Clough’s fortunes 46 | Offshore workers get high-speed connection 46 | Gray ramps up support for floating LNG

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ECONOMY & FINANCE 48 | Positioning for the next wave of prosperity 49 | $48tr needed for global energy demand 50 | Green paper investigates northern potential 51 | $10bn Adani coal mine approved 52 | Japan-Australia free trade a boost for resource

exports and investment 53 | Trade union membership at record low EVENTS 54 | Events Calendar

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COVER IMAGE INPEX

Editor | Tom Reid Tom.Reid@amma.org.au Deputy Editor | Kylie Sully Kylie.Sully@amma.org.au Advertising | Samantha Edmunds Samantha.Edmunds@amma.org.au

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AMMA Contacts 1800 627 771 | membership@amma.org.au migration@amma.org.au miningoilandgasjobs@amma.org.au training@amma.org.au

| Spring 2014 | www.amma.org.au

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REGULARS

From the Editor ONE OF THE most rewarding aspects of being involved in Australia’s resource industry is seeing how major projects transform the economic and employment landscapes of towns and regions across the country.

INPEX’s $34 billion Ichthys LNG project fits the bill as it comes alive on the skyline of Australia’s most northern capital city.

In this cover story we explore its farreaching benefits for Darwin and the Northern Territory, with local businesses so far receiving $5bn in contracts, technological innovations brought into play, and employment generated for more than 4,000 people.

Sometimes the less high profile actions tell just as much of the story, such as INPEX setting up a community presence and investing $3m in a local training centre three years before receiving final investment decision.

Ichthys represents the largest ever investment by a Japanese company outside Japan, but as we explore in Economy, Prime Minister Shinzo Abe’s signing of an economic partnership agreement with Australia promises further growth opportunities for both nations.

In Human Resources we speak to two very different service providers about ‘Top Employer’ workforce strategies and learn how

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two mining leaders are navigating their evolving people challenges.

Training and Development features contractor Downer Mining and its unique succession coaching program, while we also detail the resource industry’s role in the government’s national vocational education and training reforms.

Diversity explores the achievements of another mining contractor, Thiess. This year’s worthy Australian Women in Resources Alliance (AWRA) Award winner is realising many benefits from its strategic approach to gender diversity and inclusion.

In Innovation, the story of engineering and service provider Clough’s incredible turnaround in performance and profitability under the leadership of CEO Kevin Gallagher is outlined by one of his trusted VPs. We also feature some heavy hitters having a major crack at workplace relations reform in this country, with former PM John Howard and Fortescue boss Nev Power detailing reform areas they believe will better support Australian employment.

Our recent 2014 Resource People Summit in Perth celebrated key industry successes and outstanding achievements. In Member News we highlight the inspiring recipients of the 2014 AMMA Industry Awards, announced during a night of fun and celebration – congratulations again to the winners.

Tom Reid

EDITOR

REGULARS

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Chief Executive’s Message THIS SPRING 2014 edition of Resource People comes during a very important period for Australia’s resource industry, as we continue to navigate challenges and seize new opportunities in the transition towards heightened production and exports.

As we bring you the insights and vision of our industry’s top leaders and human resource professionals, a consistent theme is maintaining Australia’s competitive advantage.

Take for instance Transfield Services CEO Graeme Hunt, featured on page 42, who says our sector has built up great increases in productive capacity over the past several years and that as a nation “we must now get the return that is expected out of that investment”.

Similarly, in Economy, Deloitte Access Economic partner Matt Judkins says Australia’s resource industry prosperity has ‘literally decades to play out’, and that a stringent focus on efficiency could add $14 billion to our nation’s productive capacity and secure new investments.

It is AMMA’s role as the Australian resource industry’s national employer group to pursue an operating environment in which our members can innovate, build internal capacities, create flexibilities in how they work and drive more productive outputs.

In this context, we have entered a critical period for industry and workplace policy reform.

Australia’s new Senate has rapidly shown it can deal unpredictability with key parts of the Abbott Government’s reform agenda. We are, however, also seeing positive outcomes of the changing balance of power.

Our industry will be a key beneficiary of July’s carbon tax repeal – the first of several measures to put Australia back on a level international playing field and restore certainty for the global investment community.

The next step must be repealing the Minerals Resources Rent Tax (MRRT) which, at time of print, has stalled in parliament. Hopefully by the time I write the next Resource People CEO’s message another key concern for our industry will be a thing of the past.

AMMA has stepped up its campaign arguing that the removal of such impediments to further development of our sector will result in new national employment opportunities and economic growth.

These opportunities are exemplified by our cover story on INPEX’s $34 billion Ichthys LNG project. A look at this

enormous Japanese-led investment is timely given the historic Australia-Japan free trade agreement, officially signed during the recent visit to our country by Japanese Prime Minister Shinzo Abe. The bilateral trade agreement highlights the vast new investment opportunities open to Australia if we ensure policy and regulation better supports Australia’s resource employers in maximising their productive output.

This includes long-term, sustainable workplace relations reforms that will address deeper issues of productivity and competitiveness and bolster Australia’s reputation in the international marketplace as an attractive place to invest, do business and create jobs.

Following our successful 2014 Resource People Summit in Perth in May, AMMA staff and members will have great opportunities for interaction and dialogue during coming months that will both add value for member operations and bolster the advocacy and services our team provides to the industry.

Through these forums, workshops, industry briefings, special interest groups and other AMMA events, we can jointly tackle the range of industry challenges facing resource employers as you strive towards optimal people capacities within your operations.

I hope to personally see many of you at these events throughout the remainder of 2014.

TRIBUTE TO RAY EVANS One man who was renowned for advocating new approaches on important policy issues and in particular his input into the national IR debate was Ray Evans, who sadly passed away in June.

Ray was the face of several influential organisations and cared passionately about the future of our industry. His unrelenting drive for labour market reform saw him co-found the HR Nicholls Society alongside former Treasurer Peter Costello and others.

AMMA also had the privilege of knowing Ray as chairman of long-standing member company Western Mining Corporation.

He will be remembered by many as a true reformer, a great friend and mentor.

Steve Knott

AMMA CHIEF EXECUTIVE

| Spring 2014 | www.amma.org.au

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HUMAN RESOURCES

LESSONS FROM top employers Among only a handful of Australian companies to receive certification from the global Top Employers Institute this year, Technip in Australia and Assetlink Services are raising the bar to attract and retain the industry’s best talent.

NETHERLANDS-BASED TOP EMPLOYERS Institute has been certifying organisations for excellence in human resources since the early 90s, primarily focusing on employee benefits, working conditions, training and development, culture management and career development.

Technip’s vice president of human resources Darren Yeoh, was happy to partake in the Top Employers ‘Best Practice’ survey, believing the maritime employer’s workforce practices has the polices, benefits and strategies to be easily verified as global ‘best practice’.

And Yeoh right was on the money.

Providing project management, engineering and construction services in subsea, offshore and onshore energy sectors, Technip’s global operations employ 40,000 people across 48 countries and has seen it certified as a ‘top employer’ in 19 countries.

Yeoh looks after all HR matters in the Oceania arm, covering Australia and New Zealand, and has embraced the process as showcasing its dedication to advancing opportunities for its people.

Embodying flexible work arrangements in its organisational culture is a top priority.

“This means allowing people to have flexible start and finish times, working from home arrangements and also reduced hours where there is a need to accommodate personal circumstances,” Yeoh says.

While flexibility is a strength, the company also ensures it acts immediately upon its shortfalls through an annual employee engagement survey.

Technip offers employees international placements

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DARREN YEOH TECHNIP “Our last survey revealed that we needed to develop a budget for team building between the various departments,” Yeoh says.

“We found that being a project-focused company, team building was being carried out among the project teams, but there were a lot of people in support areas who were feeling disengaged because they didn’t get to participate.”

Adopting an international approach to training, Technip offers its people career development opportunities through the Technip University, a global training and learning network and encourages international placements.

“Through Technip University, we developed a Project Leadership Development Plan course which has been rolled out over the past two years to build on our project management capabilities,” Yeoh says.

“We are also very strong in developing our staff through international assignments. When recruiting, we tell people that if they want to have a career with opportunities to move around the world, then we support that.”

Integrated facilities services company Assetlink Services gained certification from the Institute following strategic efforts to preserve its unique culture during considerable growth.

Established 20 years ago, the family-owned company’s workforce grew from 800 to 3000 in the past two years alone.

Despite such growth, national general manager of people and culture Wayne Gobert believes a strong set of policies and procedures will anchor business strategies and ensure the company’s ‘family culture’ was not diluted.

HUMAN RESOURCES

WAYNE GOBERT ASSETLINK “If you think you have the right suite of policies and procedures, you have no idea until you go through the Top Employers process. It is a great process to ensure you are operating at an international standard to drive your business forward,” Gobert says.

It’s also important for employers to understand that resistance to change is normal, Gobert adds, but every effort must be made to communicate the organisational vision in a way that connects with employees.

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“Accept the fact that people are going to be nervous when you push forward,” he says. “Expect resistance but understand that if people don’t understand what is going on, they won’t do anything to help the process.”

To build engagement across a growing workforce of diverse cultures and service areas, Assetlink honed the way it communicated its vision, policies and procedures in order to connect with both its employees and customers on a more ‘human level’.

Employees were involved in establishing a set of signature behaviours based around respect, safety and attitude, and encouraged to share their personal and professional highlights through stories shared within the company.

However it was the innovative ‘Meet Them Where They Are’ program, which addresses cross-cultural engagement and communication issues that has won the company numerous national awards and helped achieve a 94 per cent retention rate.

Technip is also seeking further opportunities to enhance employee engagement and culture, with Yeoh citing its new initiative STRIVE (Supporting Technip to Reach its Vision for Equality) as a priority to increase gender diversity and improve the way it develops its female leaders.

For both employers, this ongoing active approach to workforce and cultural development will surely continue to pay off in the talent they attract and retain.

| Spring 2014 | www.amma.org.au

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HUMAN RESOURCES

MINING FOCUS: navigating change Minara Resources’ Peter Baughan and Fortescue’s Peter Thomas are no strangers to leading workforces through change. From merger opportunities to production and productivity, they share some of the key people challenges in the modern and evolving mining sector.

THE $31 BILLION merger of Glencore and Xstrata in 2013 not only consolidated a diverse project portfolio under one massive mining house, but also exposed employees of Glencore’s wholly-owned nickel producer Minara Resources to new global career opportunities.

Based solely at the successful Murrin Murrin nickel cobalt operation in the north eastern Goldfields, Minara’s domestic workforce suddenly had the world opened up to them.

The company’s general manager of human resources Peter Baughan says before the merger Minara did not always have the capacity to provide a wide range of career progression opportunities, but that’s now all changed.

“Since moving into international markets and having nickel operations in Canada, the Dominican Republic, Norway and New Caledonia, people who have worked with Minara for many years are eager to experience these other operations,” Boughan says.

“This is great, but obviously we have to look at how to manage that.

“Different parts of the world also present different cultural challenges and that is a big learning curve for all of us. These are the transitional issues that really challenge us right now.”

While the mining sector has experienced an easing of labour demands, attracting the right skills is still a primary challenge for Baughan, who also jointly heads Glencore Nickel’s human resources division.

“Whether in Australia or worldwide, good people with the right qualifications in areas such as control systems, electronics and electrical instrumentation are still rather hard to find,” he says.

“These types are skills are sort after across the industry and I Minara’s Murrin Murrin nickel cobalt operation

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PETER BAUGHAN MINARA RESOURCES would say the hydrocarbons sector can often be more appealing to people with these skills. At times we see the mining sector as a training ground for particularly young, inexperienced electrical instrument technicians coming out of their trade apprenticeships. They spend a couple of years with us and then go on to the oil and gas fields.”

West Australian iron ore miner Fortescue Metals Group is going through its own change process, having invested heavily in major project construction and expansion at its Pilbara operations and ramping up production to 155 million tonnes per annum.

“This (industry transition) requires a huge shift in mindset.

Before 2005, capital spending in the resource industry was less than $20 billion per year in Australia. Since then, it increased to more than $100 billion per year,” says director of shared services Peter Thomas.

“In the mining industry, we are seeing that level of capital investment come down. Fortescue’s major expansions have been completed, as have those of BHP and Rio Tinto.

“The focus is no longer on those levels of investment, but it is very much on productivity and that will be a priority of our management.”

While Thomas is concerned that overregulation of Australia’s workplace relations system and its many compliance requirements often distract management, he believes leaders must play a frontline role to improve productivity during times of transition.

Every week Fortescue’s senior leaders attend 6am pre-start meetings with crews ranging from 20 to 100 workers to discuss

HUMAN RESOURCES

PETER THOMAS FORTESCUE METALS GROUP

Direct engagement with the workforce can sound like a cliché, but it is often not done as well as it could be.

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both broader company focus areas and workplace matters.

“Direct engagement with the workforce can sound like a cliché, but it is often not done as well as it could be,” he says.

“Facilitating that engagement and making sure leadership allocates the time to attend pre-starts can be a challenge, but if the engagement is there the trust is there, and if the trust is there it is easy to bring the group along for the journey.

“And it really is a journey. Nothing ever stays the same, things will change, but if we are all in it together it works better.”

Baughan, who has amassed 45 years in the resource industry, agrees that both workplace relations and productivity issues remain a challenge going forward, but his career longevity has taught him the mining sector is both resilient and progressive.

Reflecting on the establishment of Minara Resources in 1994, which evolved out of Andrew Forrest’s Anaconda Nickel, he says Minara is the only survivor of the initial laterite nickel market.

“Last year was the first time in 15 years that Minara produced in excess of its nameplate capacity and I’m pretty proud of that.

The fact that we survived took the efforts of a lot of men and women over the years,” Baughan says.

“Despite the challenge, the industry will keep going on and getting better. I’ve seen some fantastic things happen, especially in innovation, diversity and occupational health and safety. From that aspect, I’m very proud to be part of this industry.”

5 minutes with...

Australian Women in Resources Alliance (AWRA) program manager Elspeth Jeffery

ELSPETH JEFFERY

My role with AWRA involves: Liaising with stakeholders, running an e-Mentoring program for women in the industry, researching and developing resources, keeping up to date with research and working with other AMMA teams.

My colleagues think I am: Dedicated, passionate and easy-going.

My alternative career choice would be: An organisational psychologist.

My favourite place in Australia is: Too many to choose from, but if I had to it would be Margaret

My favourite thing about working on the AWRA program is: The variety of work I get to do and meeting people who are passionate about increasing gender diversity in their industry and in the workforce generally.

River in Western Australia. It is such a beautiful part of the

The resource industry is a great career choice for women because: There are so many different career paths available. There is also the option to travel, work a variety of rosters and earn good money if you choose to work onsite.

My husband, family and pets (two black labs and a ginger cat).

The greatest challenge of my work is: With the breadth of initiatives and networks AWRA deals with, the challenge is getting it all done.

Studying, socialising and planning my next holiday.

world, with amazing beaches, wineries and food.

My guilty pleasure is: Googling everything and eating Mexican food.

I couldn’t live without: I’m inspired by: Entrepreneurs who make something from nothing.

When I’m not at work I’m: I would spend my last $100 on: Eating out at one of Brisbane’s many restaurants.

| Spring 2014 | www.amma.org.au

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TRAINING & DEVELOPMENT

TAKING SUCCESSION coaching onsite A new succession coaching program for Downer Mining’s high-performing site staff is proving that it is never too early to invest in future leaders.

A LACK OF middle management bench strength is a common concern of resource companies. But when it comes to succession planning, many make the mistake of focusing primarily on top-tier executives.

It was through conversations with Downer Mining senior management REBECCA MAHONY around how to retain and develop highperforming employees that training and development manager Rebecca Mahony decided to spearhead a succession coaching program for senior site staff.

“At Downer Mining, we do supervisory level leadership programs well. We also do quite a lot of work with our senior management team and have a strategic leadership program that incorporates business and commercial drivers,” Mahony says.

“However, with people in the middle such as senior site staff, there was a gap.”

With more than a decade’s experience in resource industry workforce development, Mahony knows that the optimal time to invest in retention is when intense competition for labour eases and turnover declines.

An engaged and stable group of employees working on Downer Mining’s services contract at Fortescue’s Christmas

Creek project in the Pilbara provided the perfect candidates for a pilot program.

“Our leadership at Christmas Creek has invested in the business for a long time. We wanted to recognise their stability, engagement, aspiration and exceptional performance,” she says.

Downer originally offered succession coaching to five employees operating at superintendent level or higher; however, the group was later extended due to strong interest.

“Everyone was excited to start developing themselves in a different way – outside of a training course,” Mahony says.

“I asked them to tell me about their career history, their motivations and their intentions for the future.

“We talked about where they see themselves in the near future. Some wanted to operate as production managers, mine managers or in project management roles. Others wanted to be in a general management role, perhaps 10 or 15 years down the track.

“When it came to creating individualised objectives and plans, we worked with managers to ensure each plan aligned with the areas in which they felt their staff member could develop. We wanted the process to be transparent so that both the participants and their managers felt they were getting value out of the program.”

A psychologist by trade, Mahony describes her coaching approach as ‘eclectic’and enjoys applying solution-focused

Downer’s professional development is as impressive as its mining machinery

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TRAINING & DEVELOPMENT

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High-performing site staff are selected for succession coaching

frameworks to her work.

“In recent years there has been a big movement around solution-focused coaching and it’s been wonderful to take something that has worked so well in a counselling and support framework into an organisational framework,” she says.

“It works by identifying the strengths that someone already has and focusing on how to leverage those, rather than looking at what they don’t have.”

Using this approach in a coaching situation, Mahony would ask someone to rate themselves from one to five in, for example, their ability to influence senior leaders.

“If that person believed a higher rating in a particular area would aid their career progression, we would discuss their strengths and identify ways to build towards the next level.

“They may say they would like access to more senior level meetings,” Mahony cites as an example. “So what you end up doing is moving into a goal-setting approach.”

When asked about the challenges of implementing

In recent years there has been a big movement around solutionfocused coaching and it’s been wonderful to take something that has worked so well in a counselling and support framework into an organisational framework.

REBECCA MAHONY

the program, Mahony says the industry’s unique working arrangements influenced almost every aspect, from duration to the coaching itself.

“Dealing with a fly-in, fly-out workforce, anything that would ordinarily take three months in an office-based environment is probably going to take double that when you take into consideration time off or shutdowns,” she says.

“We decided the program would go for six months and incorporate a range of modalities. All participants had access to coaching on a monthly basis. As well as making regular trips to site, I made telephone coaching available to those who preferred it. Participants could also visit me in the office if they wanted coaching during their time off.

“But for a program like this to be a success, it has to be flexible.

We have to move with the requirements of the project site.”

Participants were also encouraged to take ownership of their development through clear reinforcement that this is a selfdirected program.

A couple of participants have already stepped up in roles and, after positive evaluation and feedback, Mahoney is in talks to extend the program to other Downer Mining sites.

“We are really happy that people are getting what they needed. Their managers have also noticed areas where they have made change,” she says.

Mahony says training programs and certifications remain an important part of workforce development, but businesses also need to recognise the benefits of coaching and mentoring to support capability, engagement and retention for the long-term.

“When you have really high performers and people who are dedicated to and focused on delivering effectively, that needs to be acknowledged.”

| Spring 2014 | www.amma.org.au

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TRAINING & DEVELOPMENT

INDUSTRY TO LEAD VET reform Australia’s complex vocational education and training system will be overhauled in an effort to boost productivity.

THE RESOURCE INDUSTRY has been promised a leading role in the Australian Government’s planned reform of the vocational education and training (VET) sector.

Spearheading the reform agenda, Minister for Industry Ian Macfarlane will establish an industry-led advisory IAN MACFARLANE committee to ensure the VET system meets business needs and supports Australia’s competitiveness.

“In recent years the skills and training system has become complex and bogged down in red tape,” Minister Macfarlane says.

“Our skills and training system must be sophisticated, flexible and reflect what industry needs. That’s why the government is establishing an advisory committee of industry representatives to ensure our national training system is streamlined, efficient and effective,” the minister says.

“By making targeted and strategic reforms in this sector we will lay the platform for enhanced productivity, jobs growth and greater prosperity for industry and the Australian economy.”

Calling an end to the ‘era of training for training’s sake’, Minister Macfarlane says stakeholders have made it clear that the ‘one-size-fits-all’ regulation isn’t working.

He says the government’s reform agenda is the first in a long time to look at all aspects of VET and covers six reform objectives approved by the COAG Industry and Skills Council.

GOVERNANCE STREAMLINED The minister says bureaucratic governance arrangements have to be streamlined and a multitude of overlapping committees and subcommittees reduced.

“We’ve also moved to address the previous arrangements which gave industry no formal decision making role in the sector,” he says.

FLEXIBLE QUALIFICATIONS THAT MEET INDUSTRY NEEDS The reform process will look at making VET qualifications more flexible and better targeted to the needs of industry, as well as reducing the burden of constant updates to training packages.

“I am keen to work with industry and the VET sector to look at the issues being raised about the quality and duration of training and concerns around the veracity of assessment processes,” Minister Macfarlane says.

“Longer term, I also want to undertake a number of sectoral studies – for example in the oil and gas industry – to determine how the VET sector can better support particular industries and the changing workforce needs.”

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TRADE APPRENTICESHIPS THAT ARE VALUED AND UTILISED Among reforms in this area, the government will introduce Trade Support Loans targeting occupations on the National Skills Needs List such as plumbers, diesel mechanics, electricians and fitters. It is also finalising reform of Australian Apprenticeship Support Services to reduce attrition and boost completion rates.

RESPONSIVE AND FAIR REGULATION Reducing business costs is a key theme of the reform agenda.

A draft set of provider and regulator standards to support quality training and provide clarity around marketing of courses, subcontracting arrangements and compliance has been released, with the removal of some requirements including for all training providers to become incorporated.

An independent review of the training regulator Australian Skills Quality Authority (ASQA) has also been released, with Macfarlane intending to target ‘poor-quality’ providers and ‘leave the majority to get on with their training’.

BETTER INFORMATION FOR CONSUMERS The government is putting in place a number of measures intending to improve information flow, including a revamped website to provide business with one access point for information on government training and support programs.

BETTER TARGETING OF FUNDING “Funding for VET has to be well targeted to avoid duplication and disruption to the fee-for-service market,” the minister says.

Already announced funding includes the $476 million Industry Skills Fund that will provide employers up to 200,000 training places and support services.

According to the minister, the new industry-led advisory committee, whose members are yet to be announced, will be instrumental in developing ‘phase two’ of the reforms.

TRAINING & DEVELOPMENT

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GET engaged Australia’s workforce engagement levels may be on par with the global trend, but disengagement is still entrenched in many workplaces and threatens productivity and performance.

IN ITS 2014 Trends in Global Employee Engagement report, Aon Hewitt states that following economic stabilisation, global workforce engagement is on the rise and steadying, increasing one percentage point to reach 61 per cent in 2013.

The annual study, which analyses the perspectives of seven million employees across 155 countries reveals engagement in Australia and New Zealand increased six percentage points to 62 per cent in 2013, well above Western Europe’s 55 per cent engagement, but behind the United States (at 65 per cent), Canada (at 67 per cent) and Latin America (at 70 per cent).

While Australia’s increase in employee engagement is encouraging, Janine Temple, director of training and development for national resource industry employer group AMMA, says tackling disengagement should remain a priority for resource employers.

“Many employers are not aware of the level of disengagement in the workplace and how it impacts the organisation’s bottom line,” Temple says.

“For the resource industry, where labour productivity has been in decline for some years, disengagement must not be ignored.”

According to the Aon Hewitt report, engagement differs at different job levels. Unsurprisingly, executives and senior managers are the most engaged globally, at 75 per cent.

Middle management and frontline employees sit at 65 per cent, while professionals such as engineers have the lowest engagement level of 54 per cent.

Temple believes responsibility for driving engagement ultimately rests with leadership, but every employee must have a sense of ownership within their role.

“For example, safety is everybody’s responsibility and while

JANINE TEMPLE AMMA

The key to workforce engagement is to have engaging and capable leaders – managers and supervisors who have a clear understanding of their responsibilities and influence. it doesn’t just rest on one person, it is really important for a manager or supervisor to lead by example. They must also ensure employees are reaching agreed performance targets and that productivity goals are achieved across the organisation,” she says.

As the resource industry constantly evolves with global market demands, complex regulations and technology advancement, Temple is increasingly approached by employers looking to build internal leadership capability.

“The key to workforce engagement is to have engaging and capable leaders – managers and supervisors who have a clear understanding of their responsibilities and influence,” she says.

“As people reach management level, it is important to differentiate between management and leadership, because these are two very distinct styles. Effectively managing conflict, dealing with performance management issues, and understanding the strategies and communications styles that motivate employees are all vital leadership skills that impact engagement.”

However, Temple believes organisations should not wait until people reach middle or high level management level before receiving leadership training.

“Instilling these skills early on will create a smooth transition when promoting people in the leadership space and ensure engagement occurs at every level, leading to happier employees and greater productivity.”

Image courtesy of John Holland

| Spring 2014 | www.amma.org.au

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TRAINING & DEVELOPMENT

SCHOOLKIDS GET a taste for trades A GROUP OF central Queensland high school students have gained valuable insight into the life of a tradesperson and the training involved with a mine-based apprenticeship through a resource industry ‘Toolkit 4 School Kids’ workshop.

Sponsored by metallurgical coal producer Anglo Amercian and facilitated by the Queensland Minerals and Energy Academy (QMEA), the workshop involved 20 high school students from Rockhampton and surrounding regional towns Monto, Moura, Biloela and Mount Morgan.

“Programs such as the Toolkit for School Kids are essential in ensuring students make informed career decisions while also encouraging them to consider careers in trades,” says QMEA acting director Katrina-Lee. Throughout the day, participants attended career information sessions, networked with tradespeople from Anglo American’s Callide and Dawson coal mines, and tried their hands at welding, mechanics and basic electrics to gain real experience.

Talent manager for Anglo American’s coal business, Debbie Butler, says the Toolkit 4 School Kids workshop was collaboration between industry, education providers, the community and government.

“We were delighted to help fund this workshop to directly benefit young people in our areas of operation by providing

Central Queensland high school students got handson experience in trades

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practical experience and exposure to people who could provide meaningful advice on future career pathways,” Butler says.

“Most importantly, the event helped get the students thinking about their futures while providing awareness of the exciting opportunities that await them in the resources sector.”

This year the QMEA will offer the Toolkit 4 Schoolkids programs to more than 120 students across the state. The Anglo American funding comes from its aim to provide training and development opportunities for students at schools near its operations.

The Toolkit 4 Schoolkids workshop

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OHS & WELLBEING

RESOURCE EMPLOYERS LEAD income protection trend As more resource organisations include income protection in employee incentive and retention packages, Resource People explores one man’s journey back to work and talks to leading provider Coverforce about the benefits of income insurance.

BEING A MAINTENANCE contractor in the resource industry has seen Matt Brogan spend his career in many dangerous working environments.

So it’s with some unfortunate irony that his debilitating injury troubles began at home when simply pull-starting his lawn MADELEINE mower. As he twisted and pulled, so did FLANAGAN the discs in his back and Brogan found himself bedridden for a month.

Two years later, the 51-year-old can joke ‘that’s what the kids are for’ in reference to his domestic chores. But the accident was no laughing matter and the income protection he held as part of his employment agreement turned out to be a saving grace.

“I wouldn’t like to think what position I’d be in if I didn’t have that protection,” Brogan says.

“Initially I thought I’d be back at work in no time. When I realised I’d be off for quite a while I became really depressed.

“Knowing the money side of things was being taken care of was a huge relief and allowed me to focus on my rehabilitation.”

Brogan found the understanding and service provided by his insurance company Coverforce played a key role in keeping him positive during rehabilitation.

The highly physical nature of the work at the Waroona Alumina refinery, which includes scaling the steel structures for corrosion repair, means Brogan may never be able to return to his old position.

However, income protection provided by Coverforce has allowed Brogan the time and resources to re-skill and prepare for a less physical role in the sector.

“At my age and with a back injury it is challenging to find new employment, but I’ve done a couple of courses and now have a Diploma in Occupational Health and Safety,” he says.

“I’ve worked offshore and have a lot of experience on oil rigs and scaffolding, so I’m finding the positives in the situation and am hopeful of re-entering work in a safety role.”

Brogan’s story is not new to Coverforce client relations manager Madeleine Flanagan.

As one of the main providers of group income insurance across Australian workplaces, Flanagan says Coverforce income protection is often the difference between workers losing their home and staying financially afloat until they can return to work.

While employees are generally aware of WorkCover for on-the-job injury, she says many don’t consider the impacts of

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sustaining a serious injury on their own time.

“It can be something as unexpected as breaking their leg on the weekend bike riding and suddenly they are off work for six weeks,” Flanagan says.

“A family with a mortgage can’t absorb that for too long and suddenly they can be in a lot of strife.”

Flanagan believes the resource industry is leading the trend to include income protection as an incentive for prospective employees. With the job market tightening, including income protection in salary packages is also an effective retention tool.

“We are dealing with many potential clients at the moment who really do view income protection as an employee benefit that will attract and retain their best talent,” Flanagan says.

One example is resource industry maintenance supplier KAEFER Integrated Services, which came to Coverforce to arrange a group income protection scheme because it was required for site-based contracts, but is now seeing the wider workforce benefits.

These growing market opportunities in Western Australia’s resource industry have driven Coverforce to open a permanent Perth office and ensure more employers, like KAEFER, receive value from investing in group income protection schemes.

“It really helps to have a face-to-face presence here so people can deal with someone who knows the local market,” she says.

“In Western Australia things operate a little differently, where employers look for a stronger relationship than one based on just a business transaction. Our client community like to know we are here to resolve any issues for them.”

OHS & WELLBEING

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RESCUE CHOPPER an Australian first SHELL AUSTRALIA HAS launched a dedicated search and rescue (SAR) helicopter service to support the offshore oil and gas industry in the Kimberley – the first of its kind in Australia.

Based at Broome International Airport, the EC225 SAR helicopter is on standby 24-hours and is supported by highly trained pilots, paramedics, engineers and crew.

Shell Australia country chair Andrew Smith says the increased search and rescue capability in the region supports Shell’s Prelude Floating LNG (FLNG) Project.

“As a result of the Prelude FLNG Project, our activity offshore in the region is increasing. This combined medevac and search and rescue service ensures we are ready to respond to an incident quickly,” Smith says.

Nick Mair, regional director of the helicopter operator CHC Asia Pacific, says the service will increase with an additional helicopter in 2015.

“The aircraft currently stationed in Broome is able to undertake SAR activities in the day, and can be used for medevac at night,” he says.

“Early next year, a new state-of–the-art, all-weather SAR helicopter will enable full 24-hour search and rescue coverage.”

During times when the service is not required for oil and gas activities, it may be used to assist with other medevac and search and rescue needs in the region.

Shell’s search and rescue helicopter during training in Broome

| Spring 2014 | www.amma.org.au

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OHS & WELLBEING

MENTALLY HEALTHY WORKPLACES less likely to suffer ‘sickies’ Employers looking to reduce absenteeism could find the answer in their approach to mental health awareness in the workplace.

A RECENT SURVEY of 1,126 people, released by mental health not-for-profit Beyondblue and the Mentally Healthy Workplace Alliance, shows one-in-five employees have taken time off work in a 12-month period due to feeling mentally unwell.

Half of the respondents believe they don’t work in a mentally healthy workplace and these workers are three times more likely to take sick days due to mental health problems compared to other workers.

The results in the major resources states are mixed.

At 46 per cent, Queensland has the lowest proportion of workers who say their workplace is mentally healthy while at 62 per cent Western Australia has the highest.

The research forms part of the Australian Government funded Heads Up campaign which is encouraging business leaders to give mental health the same priority as physical health and safety.

Former Australian politician and Beyondblue chairman Jeff Kennett AC says the findings point to more attention on mental health being needed in workplaces.

“This research confirms that employers can reduce absenteeism by improving mental health in the workplace but many of them don’t understand the value of good mental health at work,” Kennett says.

“More than 2,500 Australians take their lives a year, which is much higher than the road toll.

Employers not only have a work health and safety obligation to deliver good mental health in the workplace, but also a moral obligation to support their workers who often spend more time at work than anywhere else.

“From a mentally healthy workplace, productivity improvements flow naturally.”

A recent return on investment analysis conducted by PricewaterhouseCoopers supports this. It shows that companies investing in interventions will, on average, more than double that investment through reduced levels of absenteesism, presenteeism and compensation claims.

As part of the Heads Up campaign, employers are encouraged to access a free mental health awareness guide and action plan for the workplace.

“Simply visit headsup.org.au and enter your business’ details to receive a tailor-made action plan and start reaping the benefits of a mentally healthy workplace,” Kennett says.

“Your plan will recommend several actions for you to undertake and also provide guidance on how to implement it.”

Professor Lyn Littlefield, executive director of the Australian Psychological Society says a top-down approach is required to

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create a positive culture and psychologically healthy workplace.

“Leaders need to clearly communicate their expectations to staff, provide recognition of their employees’ contribution and ensure they understand how their role fits within the bigger picture,” Littlefield says.

“Strong leadership and effective work practices boost morale and help to reduce workplace stress. Positive cultures also benefit people experiencing mental health issues as such workplaces are less likely to have dysfunctional managerial and work practices that contribute to stress.”

Resource industry employer group AMMA is facilitating industry involvement in the Heads Up program. For more information, contact membership@amma.org.au.

OHS & WELLBEING

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ONE IN FIVE EMPLOYEES under the influence at work HIGHLIGHTING THE NEED for effective drug and alcohol testing in the workplace, new research has found a troubling one-in-five employees have performed their job while under the influence of alcohol and 1-in-10 have been absent or affected by drugs at work.

Two Australian Drug Foundation surveys, each of 1000 employees across a range of industries found: • One-in-five workers had taken a ‘sickie’ due to the effects of alcohol.

• Around 40 per cent admitted to going to work while feeling the effects of their drinking.

• Nearly one-in-five had performed work duties while tipsy or drunk.

• 10 per cent had either taken a day off due to drug use or gone to work feeling the effects.

Drugs were identified as illegal drugs, synthetic drugs and unprescribed pharmaceutical medications.

The Australian Drug Foundation head of workplace

services, Phillip Collins, says many people don’t realise the hidden costs and risks associated with drinking and drug use.

“Alcohol affects a person’s concentration, coordination, decision making ability and slows reaction times.

These can have implications for workplace safety and productivity,” he says.

“Feeling the after effects of weekend drug use can be just as problematic as being intoxicated on the job. Headaches, blurred vision, irritability, difficulty concentrating and extreme tiredness can all create organisational problems.”

Collins says alcohol and drug use costs Australian businesses $6 billion a year in lost productivity and absenteeism, with alcohol use contributing to five per cent of all Australian workplace deaths and 11 per cent of accidents.

| Spring 2014 | www.amma.org.au

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OHS & WELLBEING

WEIGHING UP workplace wellness In this wellbeing feature, insurer GU Health explains the benefits of preventative health programs and the steps needed to secure a return on investment in your employees’ health.

AUSTRALIAN CORPORATE HEALTH insurance specialist GU Health estimates its resource industry payouts can reach $6 million each year. Looking at some key data, it’s easy to see why.

Monash University has warned that by 2020, three-quarters of Australians will be overweight or obese, while Beyondblue estimates a mentally unhealthy employee can cost their employer in excess of $10,000 a year.

According to GU Health’s head of product, marketing and communications, Heather Norman, such research builds a strong business case for corporate preventative health programs.

“Developing a successful preventative health program is not without its challenges, especially for mining and oil companies.

The good news is that it’s certainty not impossible,” Norman says.

“For the most effective return on investment and maximum improvement in absenteeism, presenteeism and the bottom line, we’ve found that businesses need to introduce a wellness program that identifies and targets ‘high-risk’ employees.”

Norman explains that high-risk employees can be identified through private health insurance hospital and extras claims data, general insurance claims data, onsite or online health checks

and self-selection.

Once these individuals are identified, they’re targeted with an evidence-based coaching program that uses behavioural psychology principles to guide them through behavioural change.

Tools and strategies are also developed to enable them to set and achieve meaningful personal goals.

“This framework ensures the individual is not only accountable for their health choices but for achieving long-term selfmanagement,” Norman says.

“Once high-risk individuals are receiving support, it’s then appropriate to examine your employee population as a whole.

Doing so will help to ensure that your remaining employees are on a good trajectory and don’t end up in the high-risk category in future.”

Health Risk Assessments (HRAs) are among the most cost effective and widely used tools to build a picture of an organisation’s health risk exposure.

“HRAs aggregate and de-identify your employee population to determine what health programs are most needed, and therefore most effective,” Norman says.

Investing in employee health can return great workplace benefits

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OHS & WELLBEING “In addition, individuals receive confidential, comprehensive reports about their health, helping them to determine how to proceed on their individual health journey.

“For example, an individual who has identified high stress levels through their HRA can enrol in an online program that provides information, and tips on how they can start recognising and managing stress in their life. HRAs can be completed online or via paper-based surveys and don’t require a health practitioner to facilitate.”

RETURN ON INVESTMENT Choosing an effective health and wellbeing program for an entire employee population requires some guiding principles.

Programs must be based on the needs and interests of the employees, driven by evidence-based guidelines and focused on behavioural change. Most important, Norman says, is a genuine commitment from management.

“In cases where businesses don’t have full management buy in, health programs have limited success,” Norman says.

“As with any change management program, it’s critical to have multiple communication channels at various touch points to reinforce the messages around your wellness program.

“The important thing to remember is that people are motivated in different ways, both monetary and non-monetary, and there are benefits in taking the opportunity to test how your employees are motivated by monitoring participation in the program.”

This leads to the most important step when implementing preventative health programs – knowing your numbers.

Employers must determine their baseline health profile and measure change, participation and engagement. Where possible, this should be linked to administrative data including

21

workers compensation, Employee Assistance Program (EAP) usage, presenteeism and absenteeism.

“The best way to ensure that your activities are meaningful is to make them measurable,” explains Norman.

“Without this, it’s near impossible to prove return on investment and secure future funding for ongoing preventative health programs.”

HEALTHY AND HAPPY EMPLOYEES From an employee value proposition perspective, this provides a clear opportunity for attraction and retention.

A 2011 National Workplace Health Index revealed 79.5 per cent of individuals would rather be employed by an organisation that provides healthy living programs and/or support.

“With fewer than 50 per cent of organisations actively promoting health and wellness in the workplace, there’s significant competitive advantage for businesses that do, in terms of attracting and keeping the right candidates,” Norman says.

For the most effective return on investment and maximum improvement in absenteeism and the bottom line, businesses need to introduce a wellness program that identifies ‘high-risk’ employees.

HEATHER NORMAN

ORICA LAUNCHES NEW global incident software EXPLOSIVES COMPANY ORICA has launched a new global software solution for incident and event reporting to help prevent injuries, illnesses and environmental incidents.

“This solution is a further step towards our goal of No Accidents Today,” says Mark Edebone, general manager of global sustainability at Orica.

“Our safety, health, environment and community (SHEC) project team has worked diligently to implement this tool, which is the first part of a comprehensive solution that will eventually encompass all Orica SHEC initiatives worldwide.”

A single repository for SHEC incidents and events globally will deliver improved data reporting and quality of information to help Orica manage these events more effectively.

The solution also supports key requirements of Orica’s global business including multiple languages, mobile device support and data privacy. It has been adopted across Orica operations in more than 50 countries.

Orica aims to improve employee and community health and safety outcomes

| Spring 2014 | www.amma.org.au

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MEMBER NEWS

INDUSTRY AWARDS CELEBRATE emerging talent and diversity AMMA’s 2014 Industry Awards recognised workforce-related excellence across Australia’s resources and allied service sectors.

MORE THAN 300 guests recently packed Pan Pacific Perth’s Golden Ballroom for a highly anticipated celebration of the resource industry’s ‘people’ successes, hosted by comedian Jean Kittson.

Taking out the Young Professional Award for her valuable contribution to the human resources, industrial relations and workforce management processes within Chevron Australia was the company’s industrial relations adviser Kristen Lukas.

“The Young Professional Award recognises an individual who, in a short time, has made a noticeable impact on workforce management within their organisation,” says AMMA executive director of commercial services Richard Berriman, who judged the awards with a panel of industry executives from Newcrest Mining, Santos and ExxonMobil.

“Through stakeholder engagement, technology research, design and testing, Ms Lukas built and implemented a program to track Chevron’s IR performance and identify potential risks such as the expiry of upcoming agreements and excessive right-of-entry visits.

“Now used across Chevron’s projects, including Wheatstone LNG, to keep the company’s senior management informed of key workplace relations data, Ms Lukas’ reporting tool makes her a deserving winner of AMMA’s Young Professional Award.”

With the resource sector employing the highest proportion of Indigenous people within its total workforce, AMMA’s Indigenous Employment and Retention Award is always hotly contested.

This year’s winner, vessel operator Offshore Marine Services Alliance (OMSA) – a joint venture between Offshore Marine Services and PB Towage – was recognised for creating real employment opportunities for Indigenous people through its successful 2013 Indigenous Pre-employment Training Program.

Popular comedian and Gala Dinner host Jean Kittson kept the audience laughing

“OMSA made significant improvements to its previous Indigenous employment efforts by utilising strong mentors from the organisation and community, building cultural awareness among employees, developing a senior Indigenous seafarers’ leadership group, and ensuring a seamless pre-employment to traineeship transition,” Berriman says.

OMSA general manager of employee relations Ben Matthews says the achievement would not have been possible without the hard work and dedication of the company’s staff, mentors and program participants.

“It is a tribute to our 2013 Indigenous participants. Without their commitment and motivation, OMSA wouldn’t have been able to achieve these results – we thank you for your efforts so far and look forward to seeing your careers flourish into the future,” Matthews says.

Chevron Australia industrial relations adviser Kristen Lukas accepting the Young Professional Award

www.amma.org.au | Spring 2014 |

OMSA chief executive John Reid and Indigenous business manager Harry Thorne accepted the Indigenous Employment and Retention Award

MEMBER NEWS

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Thiess took out the AWRA Award. L–R: Viv Roberts, Penny Hamilton, Mark Vining and Ray Leong

The Australian Women in Resources Alliance (AWRA) Award celebrates proactive initiatives to increase the attraction and retention of women in the resource industry. In the award’s third year it was handed to integrated engineering and construction services provider, Thiess.

“The awards judging panel could not go past Thiess’ outstanding nomination which detailed its Australian Business Mining Unit’s successful Women in Mining Strategic Plan,” Berriman says.

“Among a range of initiatives, the three-year plan introduced the company’s first sustainable framework to accelerate and develop females into senior management and non-traditional roles.

“As a result of its consistent focus and commitment to action, the Thiess mining division’s female participation rates increased from around four per cent in 2011 to 13.1 per cent by the end of 2013.”

Thiess diversity adviser Penny Hamilton says it all comes down to the efforts of the company’s People and Capability team.

“The successful delivery of diversity programs takes a great team effort, and I can assure you we’re a passionate and committed bunch,” Hamilton says “It’s that collective effort, coupled with a strong will to make a difference, which drives a culture of inclusive excellence at Thiess.”

The Gala Dinner also served as an opportunity for AMMA to pay homage to its long-term members, including Cape Flattery Silica Mines for its 30 years of membership, and geoscience company CGG and base metals miner Perilya for 20 years of membership.

Turn the page for a special feature on the diversity initiatives that won Thiess the 2014 Australian Women in Resources Alliance (AWRA) Award.

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| Spring 2014 | www.amma.org.au

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DIVERSITY

DIVERSITY by design Thiess’ Women in Mining Strategic Plan is proving a winning formula for the contractor as it eyes an ambitious goal of 20 per cent female participation by 2020. In this feature, we explore the strategies that helped Thiess take out the 2014 Australian Women in Resources Alliance Award.

IF AN EXAMPLE was ever needed of the value of a strategic business approach to increase gender diversity in a male dominated industry, look no further than construction, mining and service provider Thiess.

In 2011, the company’s 4000-strong Australian Business Mining Unit comprised MARK VINING just 4.7 per cent women. With the demand for project construction and engineering services ramping up, Thiess management realised that to remain competitive in the long term, it needed to improve its workforce mix.

“I don’t think Thiess was any different to most mining organisations in the industry back then. We had a very maledominated workforce, not by design but just by history,” says general manager people and capability Mark Vining.

“We had been talking about diversity for a while and there was certainly a point when the market was becoming more buoyant and labour was becoming scarcer. We recognised there was a significant pool of very capable women coming out of university and in professional roles that we needed to tap into.”

In the absence of a formal strategy to attract more women to the organisation, Thiess began by setting a goal to achieve 17 per cent female participation by 2015 and 20 per cent by 2020.

Realising that achieving this ambitious target required strong focus and dedication, the company hired a full-time diversity adviser to drive the strategy.

“The underlying principle should be that you create a culture where people see diversity as part of how you do normal business. We wanted to have a real focus on this, to give it energy and invigoration,” Vining says.

“Bringing our diversity adviser on board has made an extraordinary difference. When you have somebody who is passionate and can bring solutions to the table rather than problems, you quickly make great strides forward.”

Thiess’ leaders agreed the company should be one where women felt included; where attraction, engagement and retention initiatives were targeted; career pathways were visible; and formal policies reflected equal opportunity.

Following thorough organisational analysis and consultation with the workforce, the business’ first Women in Mining Strategic Plan 2013-2015 was launched which incorporated both immediate and long term initiatives to accelerate women into non-traditional and senior management roles.

The strategy is reviewed every two years to keep it aligned with the businesses’ direction, and annual ‘action plans’ are

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developed to drive yearly goals.

“We spent six months holding focus groups at every one of our project sites to identify areas that women found were barriers towards participation and career development,” Vining says.

“A lot of honest feedback was used to identify a range of quick wins and more strategic long-term actions. Some of the solutions were very practical and so easy to implement, but had been overlooked.”

Vining gives examples of increasing female representation on occupational health and safety committees and mine rescue teams while also ensuring employees had access to female medical practitioners and additional bathroom facilities where they were lacking onsite.

“These are things that we could implement almost instantly and which make a huge difference to the respect people feel in the workplace,” he says.

Thiess also increased opportunities for Indigenous women in regional areas through onsite training and employment programs, and undertook a remuneration review to identify gender pay gaps.

We spent six months holding focus groups at every one of our project sites to identify areas that women found were barriers towards participation and career development.

MARK VINING

Thiess’ Australian mining unit is aiming for 20 per cent female participation by 2020

DIVERSITY

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A Thiess employee at the Lake Vermont Coal Mine in Queensland

Thiess’ 2013 Women in Mining Action Plan included: • A working group to champion initiatives.

• Focus groups to identify barriers and opportunities.

• Site audits and plans to improve onsite facilities.

• Remuneration review to rectify gender pay gaps.

• Training and employment programs for local Indigenous women.

Employee feedback was critical to identifying opportunities for greater female participation

“While a business may believe they don’t have a pay disparity, until you substantiate that by the hard data it is simply uninformed commentary,” Vining says.

“As a direct consequence of our analysis we commenced changing our approach to salary reviews and bonuses to get much greater transparency and equity.”

By the end of 2013, female participation in the Thiess mining business unit almost tripled from 2011 levels to reach 13.1 per cent.

At the coal face, participation has increased at every project site.

For instance, female participation at its Burton Coal Mine in Central Queensland increased from just three per cent to 15 per cent in 2013 to now meet the overall industry average.

While this achievement saw Thiess win the 2014 Australian Women in Resources Alliance (AWRA) Award, the numbers paint only part of the picture. Fundamental changes to Thiess’ procedures and behaviours are set to impact its culture, performance and reputation for many years to come.

“Leaders and recruitment teams at our project sites found benefit in incorporating some key performance indicators

around the level of women that should be interviewed and employed as well as occupying superintendent and management roles,” Vining says.

“The project teams are also very much on board with the strategy and are now taking control of their own initiatives and reporting back to leadership rather than direction always coming from the top down.”

It appears Thiess is well on its way to achieving its goals, but Vining understands that with the industry’s labour and skills challenges evolving, the work is far from over.

The company is now building on its recent success by offering education and leadership development, creating awareness of its diversity focus, and inspiring leaders to make a difference.

“We want to be an employer that women want to work for and we want to show them that when it comes to diversity and career progression, we not only talk the talk, but we walk the walk,” he says.

“This will ensure we not only reach our female participation goals, but hopefully exceed them.”

| Spring 2014 | www.amma.org.au

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DIVERSITY

GOVERNMENT EXTENDS support for e-Mentoring The Australian Government will continue funding a successful online mentoring program for women working in the resource industry.

AN INITIATIVE OF national resource industry employer AMMA, the Australian Women in Resources Alliance (AWRA) e-Mentoring Program was launched in early 2013 with a mandate to provide valuable support to women forging a career in the mining, oil and gas sectors.

“I am always pleased to support private sector initiatives that assist women in non-traditional roles and industries, such as AMMA’s Australian Women in Resources Alliance,” says Minister Assisting the Prime Minister for Women, Senator Michaelia Cash.

“This is an industry-led initiative dedicated to helping employers attract, retain and reap the rewards of women in the workplace, and ensures women are able to reach their full potential in the resource sector.

“I am delighted that the government is funding AMMA to extend its activities delivered as part of the AWRA e-Mentoring Program.

“Across the next two years, one hundred pairs of mentors and mentees will be matched.”

More than 150 resource professionals have already benefited from the program, which facilitates a nine-month online mentoring relationship tailored to the remote locations and non-traditional work schedules of many resource workers.

AMMA executive director of industry services Tara Diamond says the federal government’s funding commitment mirrors resource employers’ ongoing efforts to build a pipeline of female talent.

“Women have a critical role to play in ensuring the industry has the skills and talent to build and operate major resource

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projects well into the future, however, the workforce is not as diverse as it could be,” Diamond says.

“Investment in initiatives like AWRA is vital if we are to see women’s participation in the sector increase from the current 15 per cent to our goal of 25 per cent by 2020.”

Following its initial success, the e-Mentoring scope will now target demographics of women which are particularly underrepresented in the industry.

“AWRA will bring on board experienced male and female mentors to engage with Indigenous and recently tradequalified women in the resource and allied sectors, as well as graduates in non-traditional roles,” Diamond says.

“The real value of the e-Mentoring program is that each mentee has access to the most appropriate mentor from a variety of levels in the industry anywhere in the country.

“For a woman working on a remote mine site or oil rig, a connection to an experienced professional working in a different state or on another project can make all the difference to their career development.”

Senator Cash says the initiative will add to industry-wide efforts to promote resource industry careers to women.

“The benefits (of mentoring) can be enormous for women, including increased opportunities at work, expanded network reach, higher salary, improved confidence and support from a valued role model, and increased work satisfaction – factors which are all a dynamic recipe for attracting and retaining women to the Australian resource industry,” she says.

DIVERSITY

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GEORGIOU AND GUMALA JV partnership grows WATER INFRASTRUCTURE AND resource contractor Georgiou Group has entered into a multi-million dollar joint venture with Indigenous contractor Gumala, to provide dewatering services in the Pilbara.

The JV continues a solid partnership between Georgiou Group and the 100 per cent Indigenous-owned Gumala, which has already delivered on more than $70 million in projects.

The new dewatering contract is for works located on Nyiyaparli land at Fortescue’s Christmas Creek mine and involves the installation and removal of bore pumps, head works, generators and control panels, abstraction of bore field pipework, bulk infrastructure and injection head works. It will provide work for 40 staff for at least 12 months.

Gumala director and Nyiyaparli Traditional Owner Natalie Parker says the contract leverages the industry experience of Georgiou Group with the vast cultural knowledge and business acumen of Gumala.

“This contract is another positive step forward for Gumala, not only are we creating sustainable training and career opportunities for Gumala members and Indigenous people, but we are also working on our traditional lands,” Parker says.

The Gumala Georgiou JV will provide mine site dewatering services

FORREST’S INDIGENOUS review to close jobs gap FORTESCUE METALS GROUP chairman Andrew Forrest has laid out 27 recommendations to end the employment disparity of Indigenous Australians, in a recently released review for the Australian Government.

Addressing a range of issues from education to healthcare, welfare, home ownership and employment incentives, the review points out that the employment rate for working-age first Australians is 46 per cent, 30 percentage points below that of other Australians. In remote areas it much lower.

“The very low incidence of private sector employment for first Australians in remote and very remote areas by the nonmining industry is stark,” Forrest says in the review.

“Even in Western Australia, where the mining industry leads the business sector in first Australian employment, the first Australians’ employment rate has fallen from 46 per cent in 2008 to 42 per cent in 2012-13.

“By 2018, we will need to get another 188,000 first Australians into jobs – an increase of more than 100 per cent on the current pool of working first Australians.”

As part of the recommendations, Forrest wants the Australian Government to provide the top 200 companies

and those with a strong track record of Indigenous employment, with tailored contracts to increase the proportion of Indigenous employees at a minimum of four per cent over five years.

Innovative first Australian commercial enterprises that provide mentoring, training and employment for Indigenous employees would also receive tax-free status.

The review also recommends the government replace current remote jobs services and other work preparation programs with job centres that draw on the Vocational Training and Employment Centre (VTEC) model, which involves training for guaranteed jobs. Payments would be weighted to keeping people employed for 26 weeks or more.

Fortescue’s own VTEC program has seen more than 1000 Indigenous people undertake training and gain employment at its Pilbara mining operations.

Forrest says if his recommendations are implemented ‘they will prepare those who are capable but lack the necessary skills and motivation with the training to enter the workforce.

Prime Minister Tony Abbott will provide his feedback on the recommendation following public consultation.

| Spring 2014 | www.amma.org.au

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COVER STORY

DARWIN’S CROWN JEWEL

COMES TO LIFE Inpex has quietly gone about building one of the largest LNG developments in the world on the edge of Australia’s northernmost capital city. In this cover story, Resource People learns how the US$34 billion Ichthys LNG Project is not only setting up the Japanese energy company to be a world-class operator, but why the people of Darwin have embraced the project as the crown jewel of the Northern Territory’s rapidly advancing resource industry.

www.amma.org.au | Spring 2014 |

COVER STORY

ALMOST 15 YEARS since the discovery of more than 12 trillion cubic feet of offshore natural gas reserves in the Ichthys Field and around 500 million barrels of condensate, INPEX’s $34 billion LNG project is finally taking shape on Darwin’s skyline.

“2014 has been an especially exciting year for us,” says INPEX general manager external affairs and joint venture Bill Townsend.

“We’re halfway through construction but it wasn’t until this year that we saw the skyline start to emerge. Tanks are being constructed, modules are being brought in, the jetty is coming together and buildings are being erected.

“There is a real sense of excitement in Darwin and a seeming awareness that we are building something that will have a lasting impact and underpin the local economy for generations to come.”

The Ichthys LNG Project represents the largest ever foreign investment by a Japanese company across any industry and is rife with technological innovation.

The mammoth project will soon boast the largest semi-submersible production platform and one of the longest FPSO (Floating Production Storage and Offloading) vessels in the world, as well as an 889km gas export pipeline to Darwin, which Townsend humbly describes as “not insignificant”.

Onshore, the two initial LNG trains will produce 8.4 million tonnes of LNG and 1.6 million tonnes of LPG per annum, as well as about 100,000 barrels of condensate per day at peak.

For the Northern Territory community, the project represents the largest commercial infrastructure investment ever made in their modest, but endearing capital city.

The people of Darwin are no strangers to large-scale energy projects. The ConocoPhillips-operated Darwin LNG plant, in which INPEX also has a participating interest, has been safely operating on the harbour since 2006.

In terms of the scale of economic injection and employment opportunities however, Ichthys is in a league of its own.

“The Ichthys Project will certainly transform the Northern Territory,”

Aerial shot of INPEX’s $34 billion Ichthys project

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Townsend says.

“We’ve committed more than $5 billion in contracts to NT companies directly for the construction phase and that’s a big shot in the arm for the Territory.

“Anecdotally, we are constantly hearing reports that due to the activity centred on Ichthys, things appear to be happening in Darwin and local companies are finding it easier to attract investment.”

Ichthys is a milestone for INPEX as it represents its first foray into major project operation as opposed to being a JV partner. This makes everything INPEX does in the NT critically important to the company’s reputation.

“We’ve really benefited from being in Darwin, where we enjoy very high levels of support from both the NT Government and the community. We do a lot of work to foster that support, engage and try to understand what the community’s expectations are and how to meet them,” Townsend says.

To lay the groundwork, INPEX set up an office in Darwin in 2009 and began integrating itself into the local community three years ahead of securing final investment decision.

In the same year, INPEX and its joint-venture partner, French gas giant TOTAL, invested $3 million in the Larrakia Trade Training Centre which skills both Indigenous and non-Indigenous trainees.

“The early community investments we made as a new joint venture really helped give us some credibility with the Darwin community,” Townsend says.

“Darwin is one of those places where actions speak much louder than words.

Having a clear, demonstrable example of our commitment to the community, especially so far ahead of our final investment decision, really put us in good stead.

“When the project kicked off and construction started we were already well known, we had communicated what we were doing and had established ourselves in the community as a respected and responsible corporate citizen.”

INPEX’s community engagement strategy has hinged on building a sense » of project ownership within Darwin.

| Spring 2014 | www.amma.org.au

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»

COVER STORY

According to Townsend, transparency and a willingness to consider new ways of doing things have greatly assisted in building a strong local rapport.

“It is unusual for a project of this size to be constructed in a capital city as opposed to a more remote location. But the people who live in Darwin have a ‘can do’ attitude and that’s made doing business here a real pleasure,” he says.

“We feel a sense of pride from the community, like this is their LNG project as well. When someone comes from out of town to visit their friends in Darwin, we want their hosts to say ‘that’s our LNG plant’.”

Dredging required for large-scale LNG projects, for example, is an activity of common community concern, but on Ichthys it was completed with wide consultation and hence minimal backlash.

After feedback from both residents and the government that neither stakeholder ‘was too happy’ about the traditional drill and blast method to remove a large foundation of hard rock shoal from the seafloor in the shipping channel, INPEX investigated alternative technologies.

“We committed that we would take a look at new technology just being tested in Panama, which basically used a hard edge cutter head on a drill bit to remove the hard rock, as opposed to using dynamite in drill and blast,” Townsend says.

“It might have cost a significant amount more but by implementing that new technology we were responsive to community concerns.

“Another area where we did things a little differently was with the barges that trail behind the dredgers. By not filling them all the way to the brim we greatly limited the size of the dredge plume and thus the impact on the environment.”

When added to other initiatives such as general public safety campaigns around road trains and maritime matters, these efforts have made a big difference to how the construction of the project is being received.

THE PEOPLE BALANCE Building the second largest of Australia’s ‘big seven’ new LNG developments in a capital city harbour has its advantages for INPEX, not the least being able

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The Ichthys construction workforce is a mix of local and mobile employees

We really feel a sense of pride from the community. If someone was to come from out of town and visit their friends in Darwin, we want their local hosts to say ‘that’s our LNG plant’.

BILL TOWNSEND INPEX to leverage existing amenities and infrastructure including Darwin’s electricity grid, water and sewerage systems and transport hubs.

Perhaps a less-obvious benefit is that despite its comparatively small population, Darwin’s reputation as a growing regional hub has seen workers flock to the NT capital seeking opportunities on Ichthys through the

project’s primary EPC provider, JKC Australia LNG Pty Ltd. “One of the real upsides is that we have found more local labour than we initially anticipated, and thus far have experienced no difficulty in building a highly skilled workforce,” Townsend says.

“Darwin is a nice city with nightlife, restaurants and recreation options. Many workers choose to bring their families here if they aren’t already local.”

While a significant number of its construction workforce is local, Townsend says many highly skilled project-based workers are also highly mobile and will seek new opportunities once Ichthys is complete.

In talks with the Northern Territory Government on employment and local content matters, both parties long recognised that a balance must be struck between local recruiting and FIFO. Catering to its FIFO workforce is a new state-of-the-art accommodation village at Howard Springs with the traditional name of “Manigurr-ma”, comfortably housing up to 3,500 workers.

“One of the concerns going into this project was given Darwin’s wider

COVER STORY

population of 130,000 people, creating a peak construction workforce of more than 4,000 people could significantly drain trade skills in the region,” Townsend says.

“We had to be careful not to cause a big migration of the local workforce onto one temporary construction project.

Fortunately this hasn’t materialised and that has come from us getting the balance right between hiring locally and augmenting that workforce with people from out of town.”

BATTLING FOR PRODUCTION EXPERTISE INPEX is acutely aware that seven major new Australian LNG projects will soon move into production and such a sudden transition will see intense competition for qualified technicians.

Such a scenario was recently flagged by the Australian Workforce and Productivity Agency, which predicted 57 per cent growth in oil and gas employment to 61,200 workers by 2018.

While Ichthys isn’t scheduled to start production until the end of 2016, the company is already building its operations team for the long haul.

The Ichthys project is half way through construction

“Our first phase is to recruit a management team to put all the procedures and structures in place for operations and then start to fill out the teams as required,” Townsend says.

“Those teams will comprise a mixture of people with great experience some who will have come from other backgrounds or industries and who we’ll need to train up.

“It is a significant issue for our industry and for Australia. With seven major LNG plants currently under construction, the number of new operators required in our country will be noteworthy.”

A GLOBAL CENTRE OF EXCELLENCE Townsend believes INPEX has a few ‘real advantages’ over its fellow LNG producers in the battle for Australia’s best people, particularly in its corporate culture.

The company has invested in multiple Australian hydrocarbons activities since 1986, with its portfolio including projects operated by ConocoPhillips, BHP, Apache and Shell.

But INPEX’s ‘transformation’ into a top-tier operator could be the key factor

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drawing talent to the company.

“It is a very transformational time for INPEX. We already have more than 900 people in Perth, more than any of our other locations in the world including our global head office in Tokyo,” Townsend says.

“People here are attracted to INPEX because, despite being involved in nearly 80 projects across 27 countries, the Ichthys project in Australia is the crown jewel for the company. There’s a real sense of purpose and determination in delivering Ichthys with great success.”

Townsend is a veteran of the hydrocarbons sector, having worked in Russia, Azerbaijan and Georgia with BP, before joining Woodside to manage its North West Shelf joint venture relationships.

Having joined INPEX in 2006, he is now similarly seeing personnel from major competitors join the company as its profile as a key player in the country’s burgeoning LNG sector lifts significantly.

“The Ichthys Project, through the influence of TOTAL as our JV partner, has got this Japanese-French dynamic that works quite well together in the Australian context,” Townsend says.

“On top of that the experienced people we are recruiting bring a different mix of corporate cultures and compare notes as to the best way to approach certain activities.

“We are creating our own culture as INPEX continues to grow and a key part of that is a real openness about doing things differently and developing new ideas. It’s very refreshing and perhaps a little different than what you’d experience in other companies.”

As Ichthys progresses through its peak construction and lays the groundwork for INPEX to become a major project operator in other regions of the world, Townsend is adamant its major Australian project will build a centre of expertise and excellence for the company.

Ichthys may yet create a people capacity that can be leveraged globally, but for now, with its first two LNG trains on track, further exploration programs and a potential third train on the cards, INPEX is happy to join the people of Darwin in watching its crown jewel come to life.

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POLICY

POLICY AT a glance A wrap-up of recent resource industry policy activity by AMMA executive director, policy and public affairs, Scott Barklamb.

FAIR WORK CHANGES TO SUPPORT RESOURCE PROJECTS The Abbott Government is expected to re-introduce the Fair Work Amendment Bill 2014 for debate and a vote in the newly constituted Senate in coming months after the changes were backed by the Senate Education and Employment Legislation Committee mid-year.

These important amendments address specific workplace relations concerns for AMMA members that have contributed to resource project delays and cost overruns, adverse productivity outcomes and increased industrial disputes.

Proposed changes to new project agreement making (greenfields) requirements, union right of entry rules and individual workplace flexibility are particularly positive developments for our industry and we are urging the Parliament to legislate these changes as soon as possible.

PRODUCTIVITY COMMISSION REVIEW AMMA is gearing up to represent Australia’s resource industry in an independent, comprehensive and open review of Australia’s industrial relations system to be conducted by the Productivity Commission.

We will seek to have the Productivity Commission focus on productive, efficient and sustainable changes that will provide the long-term stability needed to better support Australian enterprises trading and competing in the global marketplace.

AMMA will push for improvements on matters including bargaining frameworks and processes, dispute resolution procedures, agreement making (including the interaction of individual and collective agreements) and the observance and enforcement of outcomes.

TOUGH NEW RULES FOR UNIONS AND EMPLOYER GROUPS The Fair Work (Registered Organisations) Amendment Bill 2013, which would introduce tough new governance rules for all registered organisations including union and employer groups, is also expected to be re-introduced into parliament in coming months.

The changes were blocked by Labor and Greens members of the old Senate on May 14, but with the numbers now changed and recent scrutiny of financial irregularity by union officials, the new laws may well pass when next debated.

Changes include subjecting officials of union and employer groups to a comparable level of financial transparency and governance as company directors.

COMPETITION POLICY REVIEW AMMA has addressed key issues affecting the resource sector from a workplace relations perspective in a strong submission to the Australian Government Competition Policy Review.

A key focus was ensuring existing prohibitions against secondary boycotts are more effective in preventing trade unions from using this as an industrial tactic against target companies. Recent events in the construction and allied sectors have underscored the importance of protections against this

www.amma.org.au | Spring 2014 |

unlawful conduct and ensuring the law is properly enforced.

Additionally, AMMA has urged consideration of the impact of workplace relations issues in the competition policy review.

SUPERANNUATION REVIEW AMMA is calling for superannuation to be removed from industrial awards as retail and industry superannuation funds continue to battle over which should be the default for award-covered employees.

The review of which superannuation funds are named in industrial awards, designed by Julia Gillard and implemented

by Bill Shorten, has become farcical, with two of the three superannuation experts appointed by Labor being disqualified or resigning due to potential conflicts of interest.

We have urged the government to either introduce amending legislation or commence an independent expert inquiry, external to the Fair Work Commission, to consider what if any case there is for superannuation contributions to continue to be regulated by awards.

PAID PARENTAL LEAVE As political debate ensues over Tony Abbott’s signature paid parental leave policy, AMMA has said that imposing a new tax on Australia’s 3000 largest companies to fund the scheme would penalise resource employers already leading the way on PPL. Our members pay among the highest wages in the country and actively seek to recruit and retain more women. Many AMMA members already have more attractive paid parental leave arrangements than the government’s proposed model.

Therefore we believe any government PPL scheme should be funded through consolidated national revenues and not pushed onto those employers already heavily investing in gender inclusion.

SCOTT BARKLAMB AMMA

POLICY

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RESTORING THE RULE OF LAW – interview with Nigel Hadgkiss LAUDED AS THE right man to clean up industrial lawlessness in the construction sector, chief executive of the Fair Work Building Construction (FWBC) Inspectorate Nigel Hadgkiss was recently interviewed by prominent industrial lawyer and partner at Seyfarth Shaw, Henry Skene.

HS: Nigel, how do you describe the state of affairs now to when you left the ABCC in 2008?

NH: In 2003, I warned then-workplace relations minister Tony Abbott that the industry had been penetrated by organised crime. I’m afraid to say that in 2013, the situation had deteriorated rapidly right around Australia.

In my mind the industry should be no different than any other industry in terms of unlawful conduct. There are many ‘tough’ industries that don’t have the same degree of unlawful conduct or penetration of organised crime.

HS: Does the FWBC currently have the powers it needs?

NH: Since I left in 2008, the penalties have been weakened and that’s made it difficult for my people to address unlawful conduct. The penalties are now a third of what they used to be so there is now no great incentive to comply with the law.

From my experience, the industry requires a strong regulator, strong powers and a determination to address unlawful conduct.

For instance, at the time of my departure I had exercised compulsory examination powers something like 116 times, but I believe they’ve only been used twice in recent years. At the moment it is exceptionally difficult to utilise those powers.

I have served on three Australian royal commissions and assisted with a Canadian royal commission – to get to the bottom of things within a dreadful industry culture you need compulsory powers.

HS: You have come back in and talked about changing the priorities of the FWBC organisation. What you mean by this?

NH: The focus of the agency has gone away from core business coercion, discrimination, unlawful entry and thuggery, to more on workers entitlements. I have restored the focus to the thuggery, while wages entitlement matters have gone to the agency that it justly deserves and that’s the Fair Work Ombudsman.

HS: How proactive is FWBC in identifying and addressing unlawful conduct that was not otherwise being pursued?

NH: When I started in October the agency had just four right of entry investigations – we now have 55. Unlawful industrial action investigations have doubled to 32; coercion has more than doubled from 14 to 30; and in October we had no freedom of association investigations, we currently have nine.

At present we have 22 matters before the courts and the main allegation is coercion and that’s followed by unlawful industrial action. So the change of focus I brought in is already seeing results.

HS: Right of entry is a key issue for the resource industry, what should be done to fix it?

NH: Recently I had cause to publish on our website a list of

Nigel Hadgkiss

union organisers who did not have site entry permits as it’s been a widespread practice that they go interstate, on sites purporting to have permits when they don’t.

Safety is used as a motive but it’s more about industrial agendas.

Recently, one organiser was prosecuted who went onto a site for safety concerns but had an eftpos machine in his possession.

There is also habit of the shrinking of permits. You can imagine if a West Australian constable pulled over a motorist and they’d shrunk their drivers licence to the size of a postage stamp they’d probably end up in the back of a paddy wagon.

Addressing these issues is a matter of strong education for site management.

HS: How do you see resource industry employers best engaging with FWBC in its new approach?

NH: When I took over in October there was a general loss of confidence in the agency.

The industry wants an agency that could be spoken to in a confidential, off-the-record fashion because of the absolute fear that resides within the culture of the industry. Employers want an agency that is visible, active on sites, and that could respond quickly.

Like any culture, you can’t flick a switch and expect it to suddenly get better. It will improve – we can’t have the status quo and we certainly cannot have the deterioration seen in the last few years.

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SHELL CALLS TIME ON unproductive workplace laws Shell Australia’s country chair Andrew Smith is calling for the removal of workplace impediments, such as unproductive enterprise bargaining agreement clauses, for the next generation of Australian workers to prosper.

“WE HAVE LONG known that Australia has become a high cost labour market. This is the direct result of our success in raising wages and living standards,” says Smith, who primarily looks after Shell’s wide portfolio of upstream activities in Australia.

“We should never be ashamed of the standard of living that our economy has delivered to Australian workers, but equally we should never accept inefficiency in our workplaces.

“When high labour costs are coupled with inefficient workplaces – international capital recoils, and looks for more attractive investment destinations. If the next generation of Australian workers are to prosper in our open economy we need to identify and remove impediments to labour utilisation.”

Smith, who first joined Shell in 1986 as an engineer at its Geelong Refinery, refers to the company’s experience in planned maintenance as an example.

A task requiring five skilled employees working 500 paid hours plus 100 hours of scheduled breaks and travel, turned into a labour spend of 700 hours due to restrictive workplace practices such as demarcation.

“The result was we had 500 hours of work, but we paid for 700. This was a double blow. Not only did it cost more to complete the task, but the equipment being maintained was unavailable for longer than expected and longer than necessary,” he says.

“In Australia’s high wage environment, when an oil industry worker is paid approximately 130 per cent of the American Gulf Coast benchmark, we need to refocus on maximising effective hours at work.

“A first positive step would be to eliminate unproductive clauses in enterprise agreements. We need to rid EBAs of work practices that impinge on the right to allocate labour effectively.”

Smith says business needs enterprise agreements that provide

A first positive step would be to eliminate unproductive clauses in enterprise agreements. We need to rid EBAs of work practices that impinge on the right to allocate labour effectively.

ANDREW SMITH

Andrew Smith

certainty in investment, including greenfields or new project agreements that last the life of the project.

“When a government or company decides to build a project, be it a freeway in one of our capital cities or a remotely located resource project, it is only fair that it can make a reasonably accurate estimation of the labour costs it will incur in construction,” he says.

“At present enterprise agreements do not deliver that certainty.

It is only through greenfield agreements that last the length of a construction process that this certainty can be delivered.

“Naturally these agreements can include wage increases based on inflation. But agreements that expire midway through construction projects are a disincentive to investment, as they often lead to prolonged bargaining periods and industrial disruption.”

Smith also welcomes the government’s reintroduction of the Australian Building and Construction Commission (ABCC).

“While some unions continue to ignore their obligations under enterprise agreements and the Fair Work Act – the ABCC as an independent regulator is needed to hold all parties accountable for their actions and ensure compliance with their obligations under the law.”

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POLICY

TUGBOAT STRIKE SPARKS Fortescue boss to rally for reform A high profile industrial dispute involving the Maritime Union of Australia and Port Hedland tugboat operator Teekay Shipping has seen Fortescue chief executive Nev Power call for reform to laws that unduly expose resource operations to damaging strike action.

OUTLINING THE ECONOMIC and employment benefits delivered by Fortescue’s Pilbara iron ore operations, CEO Nev Power explains how the impacts of Australia’s unbalanced workplace system are compounded by increasing global competition.

“The impact of our project has been very significant for the state and for Australia. We want to see that continue into the future... but that future is all about (maintaining) our position on the global cost curve,” Power says.

“We have to understand that in the game of resources – which is so critical to Western Australia and Australia – we are not fixed.

We need to continually work on improving our cost position.

“I have a concern in that journey on what is happening in terms of industrial action in Australia. From 2007 through to 2013, we have seen a massive increase in days lost due to industrial action. This is a return to the mid-’80s and early ’90s that saw the destruction of so much of the competitiveness our industry.”

The catalyst for Power’s comments is the recent situation at Port Hedland, where a small group of tugboat deckhands employed

by Teekay Shipping and represented by the Maritime Union of Australia (MUA), threatened strike action in pursuit of EBA claims.

Power questions how Australia’s industrial relations system could potentially allow about 55 employees to cause stoppages of the Pilbara’s lucrative iron ore export projects and cost the Western Australian economy $7 million per day.

“In three days, the strike would cost the West Australian taxpayer the entire 2015 budget for the homeless in Western Australia... it will cost the construction of a primary school,” the Fortescue boss says.

“This is a dispute that doesn’t just occur between the employees and the employer. We have a very small group of people who have extreme monopoly power over not only their employer, but all of the companies that use that port; all of the employees throughout the Pilbara whose companies use that port; the Western Australian taxpayer; and the federal taxpayer.

“And it’s not just about the impact to mining companies; this impacts on people. What’s wrong with our system that we can have this happen?”

This dispute, and other recent high profile developments, have seen the Australian Government introduce a regulatory change to the Fair Work system which would allow an impacted third party to apply to the Fair Work Commission (FWC) to suspend or terminate that action.

The new regulation would also provide the Western Australian Government, the only state not under the federal employment

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NEV POWER FORTESCUE METALS GROUP

I put to you that we don’t want industrial law, which is so critical for our productivity and the future development of our economies, to be a political football that swings one way or another.

Port Hedland is critical to Fortescue’s iron ore exports

POLICY

we have been able to do that in an environment that has been relatively free from industrial manipulation and industrial sabotage.

“We want to make sure that the legislation and the environment going forward allows Fortescue’s of the future to continue to develop and that they are not lost to future generations and the economic development of our country.”

I have a concern about what is happening in terms of industrial action in Australia… this a return to the mid-’80s and early 90s that saw the destruction of so much of the competitiveness our industry.

NEV POWER

JSD02672

jurisdiction, to apply to the commission for a strike to be stopped.

Such a move recognises that strike action often has far broader impacts than on just the direct parties, including hurting employers and employees on both sides of the supply chain and disrupting economic and community activities more widely.

From a global perspective, Power notes situations like the Port Hedland matter impacts on Australia’s reputation as a ‘reliable and competitive supply market’.

The Fortescue chief believes Australia can no longer afford to accept a ‘swinging pendulum of industrial relations policy’ and that our national policy makers need to ‘start thinking about an industrial relations system that suits us for today and for the future’.

“I put to you that we don’t want industrial law, which is so critical for our productivity and the future development of our economies, to be a political football that swings one way or another depending on the colour of politics that are in power at the time,” Power says.

“We are very proud of what we’ve achieved at Fortescue and

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| Spring 2014 | www.amma.org.au

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MIGRATION

VISA FURORE HITS the high seas Certainty has been restored to the oil and gas industry following a parliamentary move that threatened to force all international workers in Australian waters to down tools.

THE FIRST SITTING week of the new Senate was always going to be a little chaotic, however a Greens motion supported

by Labor and the Palmer United Party to disallow regulations specifying visa options under new migration legislation almost brought the offshore resource industry to its knees.

Taking effect on 29 June 2014, former Labor government legislation extending Australia’s migration zone to include offshore resource projects in the country’s exclusive economic zone (EEZ) placed additional visa compliance burdens on international vessels temporarily entering the EEZ to perform specialist infrastructure work for offshore resource projects.

Resource industry employer group AMMA strongly opposed this legislation as a ‘deliberately complicated response to a non-problem’.

With the changes at odds with international practice, the Abbott government introduced regulations offering a selection of visa types that aimed to reduce unnecessary red-tape and negate any adverse impacts on Australia’s competitiveness as a place to do business. Industry supported this regulation as a practical approach.

However, the Greens disallowance motion effectively invalidated all temporary offshore visa arrangements, including the previously unaffected subclass 457 visas utilised by highly skilled workers on fixed platforms. This meant the approach of Labor and the Greens had a vastly wider impact than claimed by the motion’s main proponents in the maritime unions.

Assistant Minister for Immigration and Border Protection Michaelia Cash was forced to urgently resolve the situation.

Acting on the authority provided to the government under the Labor legislation, Minister Cash issued a legislative instrument that restored regulation of offshore visas to the long-standing pre-June 29 arrangements, meaning: • Offshore resources activities involving an Australian resources installation, fixed to the Australian sea bed requires noncitizens to hold an appropriate work visa, such a subclass 457 visa. A Maritime Crew Visa is valid for work as the crew of a ship only.

• For other offshore resources activity, which does not come within the migration zone, there will be no visa requirement.

Minister Cash says the Greens and Labor acted at the behest of the Maritime Union of Australia (MUA) which was seeking to gain wider coverage of maritime workers.

“The Greens disallowance motion resulted in a situation where a person who is not an Australian citizen or permanent resident was in breach of their temporary visa conditions if they participated in or supported an offshore resources activity,”

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Minister Cash says.

“Labor Senators capitulated to the ideological demands of the most militant union in Australia in a move that plunged our domestic oil and gas industry into an avoidable state of uncertainty.

“The Coalition Government understands the importance of this industry and the jobs it creates for Australians and therefore we have moved swiftly to rectify the state of uncertainty deliberately created by the Disallowance Motion.”

AMMA migration manager Jules Pedrosa hailed the legislative fix as a straightforward, job-supporting solution to a highly complex problem that could have jeopardised Australian jobs and the nation’s international reputation.

“Only a handful of these highly specialised offshore construction vessels exist globally – they aren’t taxi-cabs where local operators can be easily subbed-in and out. Each vessel uses highly specialised technology not available in Australia and has significant capital invested in them,” Pedrosa says.

“Without this sensible fix, critical project timelines would be at risk, harming a $200 billion industry and the contribution it makes to living standards and work opportunities for Australians.

“What started as a maritime turf war, and an opportunistic attempt to overturn long-standing international law and practice, escalated to threaten thousands of jobs in an industry which relies on offshore construction to be completed efficiently and cost-effectively.”

Pedrosa says that contrary to misleading maritime union commentary, the small numbers of employees targeted by the disallowance motion are highly paid, and employed in full accordance with applicable laws and obligations.

For all enquiries relating to this complex matter, contact Jules.Pedrosa@amma.org.au

MIGRATION

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TRADES ADDED TO skilled occupation list CHEFS, BRICKLAYERS AND wall and floor tilers have been added to the Skilled Occupation List (SOL) to help meet the skills needs of the Australian economy, Minister for Trade and Investment Andrew Robb and Assistant Minister for Immigration Senator Michaelia Cash have announced.

Minister Robb says the addition of chefs to the SOL reflects that the occupation is in short supply, coupled with strong growth projected in the café and restaurant sector.

He also cited strong investment interest from Asian and Australian-based luxury hotel chains in explaining the move.

“The inclusion of chefs, as well as the further inclusion of building and construction occupations will ensure Australia can fill the workforce needs of the next wave of tourism infrastructure,” he says.

The recommendations came from the Australian Workforce and Productivity Agency (AWPA) which analyses Australia’s

changing skills needs. The AWPA’s functions have recently transferred to the Department of Industry.

“The AWPA analyses evidence such as the labour market, education and training, migration and general economic and demographic data to make sure we get the balance right,” Minister Cash says.

“In this case, bricklayers and tilers have been added to the list because of an increase in demand predicted for these occupations as well as a decrease in apprenticeship completions.”

The SOL is used for people applying for the independent or family sponsored points tested visa or temporary graduate (subclass 485) graduate work stream. Before prospective migrants can apply for independent skilled migration, they must submit an expression of interest via SkillSelect.

No existing occupations are being removed from the SOL, which currently lists 188 occupations that Australia needs.

| Spring 2014 | www.amma.org.au

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LEADERSHIP

HOWARD: WORKPLACE reform not finished Former Australian Prime Minister John Howard has described the current state of industrial relations as a blemish on the nation’s economic history and has voiced support for the current Australian Government’s policy reform direction.

SPEAKING TO A full room of resource industry employers at the recent AMMA 2014 Australian Resource People Summit, Howard says he is proud of Australia’s past economic reforms but believes the workplace relations system is not where it should be.

“As I look back over those 30 years or more of economic reform, I can say with great satisfaction that many people have tried to contribute to improve the economic climate in which this country does business. Many of those reforms are things which Australians can be proud of,” Howard says.

“But the one area in which we unfortunately have gone backwards is the area of industrial relations reform.”

Australia’s second longest-serving Prime Minister encourages further changes to the national workplace relations system,

Economic reform is rather like competing in a never-ending footrace. The finishing line keeps disappearing, but you have to keep running because if you don’t, the other competitors in the race are going to surge past us.

JOHN HOWARD

John Howard addressed the 2014 Australian Resource People Summit

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believing it is now more inflexible than when he took office.

“In the early 1980s, Australia had a rigid, centralised wage fixation system. It was an industrial relations system that was completely insensitive to the needs of small and medium sized business, and it was completely insensitive to the needs of export industries such mining and agriculture,” he says.

“The industrial relations system now is not only infinitely more rigid than the one that was in existence when my government left office, but it is even more rigid than some aspects of the industrial relations system that I inherited when I became Prime Minister in 1996.

“The task of economic reform is never finished. It is rather like competing in a never-ending footrace. The finishing line keeps disappearing, but you have to keep running because if you don’t, the other competitors in the race are going to surge past us.”

During his time as Australia’s 25th Prime Minister from 1996 to 2007, Howard’s economic management saw the resource industry’s gross value added rise 54 per cent, from $136.5 billion in 1996 to $202 billion in 2008.

In the same period, direct employment in the industry grew from around 88,000 people to 161,000 people, an increase of 83 per cent.

A key area of the Howard Government’s policy reform was the Workplace Relations Act 1996, which aimed to centralise and modernise Australia’s industrial relations system. Howard is also responsible for other major economic reforms including the induction of the Goods and Services Tax (GST).

He says Australia came through the global financial crises ‘in very good shape’ due to the strong economic position his government created as well as the availability and efficiency with which our natural resources were extracted.

However he warns against complacency about Australia’s economic standing and the strength of the resource industry.

“One of the worries that I have about the attitude of Australia at the present time is that because we came through the global financial crisis in better condition than most other countries, there’s a tendency to believe that we don’t really need to tend to the issue of reform anymore – that we’ve done enough, that we’re in good enough shape, that our economy is waterproofed against any kind of downturn in the future,” Howard says.

“Now that is a foolish delusion, and is one of the reasons that I very strongly support the direction that the current (federal) government has taken with its Budget.

“The resource industry has made this enormous contribution and continues to make an enormous contribution to Australia, but it’s a contribution that nobody should take for granted.”

LEADERSHIP

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NEW BECHTEL boss eyes excellence Taking the reins as president of Bechtel’s global mining unit and the company’s managing director for Australia earlier this year, Shaun Kenny is wasting no time putting his leadership stamp on this ‘people business’.

AFTER 17 YEARS with engineering, construction and project management company Bechtel, Shaun Kenny has identified a number of ‘people’ areas in which he is focused on driving performance in his first year as the company’s new mining president.

Starting with Bechtel’s impressive safety record, he proudly states the company’s BMA Caval Ridge coal operations in Queensland has completed five million hours lost time injury free.

“Our business is a people business. Engaging with people is not only the key to a happy workplace but also the key to stronger project performance,” says Kenny, who joined the company as a senior construction engineer in the United Kingdom before moving into business development and operations management.

“It is no coincidence that the best projects with the best safety outcomes have the best performance. We should all want zero injuries and I can tell you that we have improved because we’ve put safety at the core of what we do.

“We engage people who work in the field to observe and coach each other to be safe. Our safety engagement can never rest because there is a clear link between engagement and performance.”

Kenny is also investing heavily in workforce development and is focused on delivering the Bechtel Certification Program which builds competence levels related to specific job expectations.

“We can’t expect our people to deliver quality if we don’t invest in their competence and their capability,” he says.

“What we are looking for is consistent execution of an improvement in company procedures and policies and processes to drive down cost and eliminate variability.

SHAUN KENNY BECHTEL

A Bechtel employee at the Koorangang expansion project

“The 11,000 people or so that have been certified in the mining and metals business have been engaged, they have stepped up and responded by building their own skills.”

Part of this approach to skills development is ensuring Bechtel’s human capacity is consistent across the global mining team.

“On our projects, we provide a blend of seasoned and skilled international personnel and local professionals,” Kenny says.

“It is a real benefit to be globally diversified but there must be consistent standards so we can swap people in and out of projects and effectively deal with the cycles that we see in various industries.

“That not only helps us and our customers, but it also leaves a very positive legacy for everyone in the community. At Bechtel’s three LNG projects in Gladstone, we offered accredited training courses ranging from steel fixing to safety and many more.”

With 53,000 employees situated across 160 countries, training in ethical challenges is also important. Bechtel runs workshops to discuss ethical cases to ensure its people know how to handle real-life scenarios.

Convinced that the resource construction and engineering sector could better harness innovation, Kenny is also making a concerted effort to prioritise technology development in Bechtel Australia’s operations.

“There’s certainly much more the industry could be doing. Right now we are really focused on our Bechtel Fellows, which is a group of industry experts across the world who are effectively the keepers of technology knowledge within our business,” he says.

With these examples representing a fraction of Kenny’s plans in his new role, Bechtel and its people seem set to push the performance boundaries well into the future.

“All of Bechtel’s achievements in Australia around the world wouldn’t be possible without an enthusiastic and engaged workforce,” he says.

| Spring 2014 | www.amma.org.au

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LEADERSHIP

INDUSTRY LEADERS tackle the transition With a combined 70 years of industry experience, Transfield Services’ Graeme Hunt and Orica’s Ian Smith are fitting commentators on how Australia’s resource organisations can remain globally competitive during the industry’s transition.

HAVING HELD A string of leadership roles with some of the biggest names in resources, both Graeme Hunt and Ian Smith are now managing director and CEO of their respective organisations in the services and supply sectors.

Joining Smith to discuss the industry’s evolving landscape and what it takes to succeed in changing times, Hunt says slowing markets are nothing new in the resources business “Cycles, booms and busts in resources go back as far as you’d like to think about” says Hunt, who is more than two years into his role with Transfield Services, moving from Lihir Gold Ltd in 2012.

“What is different about this one is how long the investment and capacity growth part of the cycle lasted. What we shouldn’t lose sight of is that all that investment has actually led to productive capacity. So the revenue base out of that investment is going to continue for a long time to come.

“The key part of that production cycle is making sure we get the return that is expected out of that investment.”

While it remains to be seen how demand from China will grow, Hunt says Australia will nonetheless compete for supply contracts with the United States, which is positioning as an economical gas exporter.

“The US is moving from being a net energy importer to being a net exporter, which will have a fundamental impact,” he says.

“It’s very attractive to invest in that part of the world now relative to here because of both the availability and price of gas.

“Australia is fortunate that the quality of what we dig up, drill or pump out is much higher than most places, but we have got to be as efficient as we can.”

Hunt and Smith agree that to be competitive, Australian resource industry leaders must lock in strong productivity measures.

Smith was appointed to commercial explosives and blasting systems provider Orica in 2011 after five-years as MD and CEO at Newcrest Mining. He says during the past decade of investment and expansion, the industry let unproductive measures creep into its practices.

“In some respects the industry took its eyes of the ball.

Now it’s about getting back to the fundamentals and actually connecting with the workforce that is the basics of business being better tomorrow than you were today,” Smith says.

“We are connecting with everyone in Orica about how we can do that and looking at every part of our business to understand productivity restrictions.”

Smith says Orica recently negotiated an enterprise bargaining agreement to consolidate two rosters at its operations at Kooragang Island, Newcastle.

www.amma.org.au | Spring 2014 |

IAN SMITH ORICA

GRAEME HUNT TRANSFIELD SERVICES The company was losing four to five hours per day in multiple wind-downs and shift changes due to the two production points for ammonia and nitrate. There is now one roster where employees are skilled to work in both areas.

“That gives immediate productivity uplifts. If people want to be an operator in both ammonia and nitrate, you pay them more and it gives you more flexibility,” he says.

Smith, whose company has a 28 per cent global market share in its niche sector, believes it is time for productivity discussions to be formalised in workplace agreements, but says legislation is not everything when it comes to improving productivity.

“When people don’t want to talk about productivity or want

LEADERSHIP

a pay increase without negotiating something that will lead to a more productive environment, then the legislation should help frame that discussion. The legislation should be built around productivity,” he says “But to drive a more productive workforce, you have to get everyone in the business environment on board and not allow things to happen that will put you in a less competitive space.

“It is up to all of us to make sure that we drive a more productive, more efficient environment for everyone and you can’t blame legislation when it doesn’t happen.”

Hunt is also focused on delivering productivity improvements for Transfield Services’ clients across 18 industries and 11 countries. The company is applying technology such as mobile smart devices to drive efficiencies.

“We are linking a technology which is a bit like a taxi dispatch system to our enterprise resource planning system so employees can go straight from home to their first job and the system keeps topping them up with work through the full shift,” Hunt says.

“They can generate work orders in the field and can also take photos and send them back to the workshop where more sophisticated work orders can be generated.

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“Through that process we’ve increased our tool time by about 30 per cent and decreased our travel time by about 30 per cent. That has got spin-off benefits around costs and safety improvements because people aren’t driving as many kilometres between jobs. “ “And lot of the work order generation is done in the field by the people that are going to do the job in the end. This is a relatively small investment but it is about being smart about how we do things.

“People have this view that productivity means working harder, but working smarter has got to come first.”

Summing up his thoughts on navigating the resource industry’s transition, Smith says it is about acknowledging that what might have been the priorities a few years ago will not be the priorities going forward.

“We’ve got to work out as a country how we harness (investment) in the most productive way,” he says.

“How we can feed of the back of the resource industry and all the service industries that Graeme and I represent to grow employment and keep the Australian economy going while it diversifies into other areas.”

| Spring 2014 | www.amma.org.au

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INNOVATION

’FOUR PILLARS’ STRATEGY turns Clough’s fortunes In one of the industry’s most remarkable business transformations, engineering and project services company Clough went from stagnant performance during boom times to doubling profits in just two years. Here, executive vice president Raj Ratneser discusses the leadership that put Clough back on track.

RAJ RATNESER HAS a vivid memory of the first few weeks under the new leadership of Clough CEO and managing director Kevin Gallagher in late 2011.

“Kevin joined the company when its share price had been flat for several years, driven by a lack of consistency in earnings and lacklustre profitability,” says the executive director and executive vice president of health, safety, security and environment, and corporate governance.

“One month into his tenure, Kevin had to announce to the market a profit downgrade. Let me tell you – that was not a fun time to be in his management team.”

What allows Ratneser to be so candid about the engineering and project services company’s position at that time is what happened after that solemn day.

Determined to overhaul the way Clough did business, Gallagher and his management team led a transformation that would see the company achieve success so far unrealised in its 95-year history, beginning with an ‘honest and reflective’ analysis.

“We found a company that was focused on revenue growth though lacked focus on profit and loss accountability. Clough employees were confused about the strategic direction of the company,” admits Ratneser, who has worked with the company for a decade.

“The business was poorly structured with the layers of bureaucracy and role duplication across business units. This was creating significant cost burdens and impacting the company’s competitiveness and profitability.”

To overcome these issues, Clough’s leadership established a strategy based on four key pillars: leadership, communication, discipline and growth.

Clough drives a ‘pursuit of excellence’ performance culture

RAJ RATNESER CLOUGH BUILDING LEADERSHIP AND PEOPLE CAPABILITY Ensuring the right leaders were in place and on board with Gallagher’s determination to turn the business around was critical.

“After three months in the business Kevin formed an executive committee consisting of the highest leaders in the company. Early on the committee established a talent development and succession planning process to ensure that we have a strong pipeline of leaders from graduates to executives,” Ratneser says.

“Our Leadership for Higher Performance program was implemented to provide leadership training and create an organisational environment that promotes high performance.”

Clough also changed its approach to recruitment and retention.

“We refocused our approach to staffing projects from what was common at the time, which was hiring off-the-street to ensuring core leadership positions on projects were staffed with employees who had demonstrated competence,” he says.

“To drive the right safety, cost and productivity behaviours we introduced a new remuneration program to align and incentivise project staff based on project key performance indicators.”

Also recognising the important role of project managers driving cost and productivity performance, Clough is working with tertiary institutions to establish a Project Management Academy.

COMMUNICATING THE VISION To ensure Clough’s 6000-strong workforce, located across Australia, Papua New Guinea, Asia and Europe, understood

www.amma.org.au | Spring 2014 |

INNOVATION

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Clough introduced a remuneration program based on project KPIs

and embraced business transformation, management commenced a cultural change program centred on a five-year vision to be a ASX top 100 company by 2017.

“We commenced an internal communications campaign to ensure clarity and alignment of the company’s strategy and business model,” Ratneser says.

“This involved CEO breakfasts, staff briefings and strategy posters in every meeting room at all office locations around the world.

“We developed the ‘pursuit of excellence’ performance philosophy to drive a high performance culture, and used a simple visual tool to communicate Clough’s new operating model ‘4+2+3’, representing our four business lines, two market sectors and three key regions.”

DISCIPLINE IN EXECUTION Confident that employees were on board with the new vision, Clough began to sharpen its approach to service delivery.

This involved restructuring the business to drive greater profit and loss accountability, and conducting monthly ‘deep dives’ into project performance to identify, analyse and correct issues that may impact safety, cost and productivity.

However, Ratneser is particularly animated talking about Clear View, which maps out a ‘perfect day’ of onsite productivity.

“We want our onsite crews to chase the perfect day, every day. And we want them reporting back on how they did, every day. To our mind, this is one of the most powerful productivity tools that we have conceived,” he says.

EXECUTING A GROWTH STRATEGY With its business fundamentals optimised, the final element of Clough’s transformation relies on a growth strategy focusing on excellence in execution, cost efficiency, diversification, and organic growth and acquisitions.

This includes putting a greater emphasis on self-executed projects rather than joint ventures, consolidating IT systems, cutting $20 million from its cost base and re-entering the

We want our onsite crews to chase the perfect day, every day. And we want them reporting back on how they did, every day.

RAJ RATNESER mining and minerals market after a period specialising in full project lifecycle services to the oil and gas sector.

“We mapped Clough’s growth journey through a ‘New Horizons’ strategy – offering new services to existing regions and existing services to new regions,” Ratneser says.

“More recently we embarked on a selected services-led international expansion; restructuring the business around international service lines and establishing international engineering offices in the United Kingdom and South Africa.”

In the 2013 financial year, two years after commencing what Ratneser coins the company’s ‘journey of transformation’, Clough achieved unprecedented financial results.

Revenue increased by 50 per cent and net profit after tax increased 111 per cent, jumping from $34.8 million in financial year 2011 to $73.9 million in financial year 2013.

The company also achieved sustainable cost savings of more than $10 million.

“When we set Vision 2017, most staff believed we wouldn’t be able to get there. In reality, we achieved it four years early. (Clough is no longer an ASX-listed company following an acquisition by South African company Murray & Roberts.)

“While we are quietly proud of our achievements, we acknowledge that we are not there yet. We’ve embraced the concept that the journey of transformation and adaptation never really ceases.”

| Spring 2014 | www.amma.org.au

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INNOVATION

OFFSHORE WORKERS GET ultra-high-speed connection OFFSHORE RESOURCE WORKERS at Shell’s Prelude Floating LNG and INPEX’s Ichthys LNG projects will be able to connect with family and friends through a new ultra-high-speed subsea communications system scheduled for completion in 2016.

Capitalising on the proximity of their respective projects in the Browse Basin off North West Australia, Shell and INPEX have both invested in the project which will see a 2000 kilometre subsea optical fibre cable stretch between Darwin and Port Hedland.

Currently under construction by the Nextgen Group, the system will provide access to high-speed data and voice communication services for the life of both operations.

Shell Prelude asset manager Jim Marshall says the project’s close proximity to Ichthys represents a significant opportunity for both companies to achieve a better technical and commercial outcome.

“The subsea cable will give us a highly reliable and stable high-speed voice and data service which is essential for effective and efficient operations at our future offshore facilities,” Marshall says.

“It means that workers at Shell and INPEX will have an ultra high speed communications link so they can stay in touch with their friends and families while working at offshore facilities.

“Our investment will also establish a valuable piece of

infrastructure that has the capacity to support the development of future offshore resources in the Browse Basin.”

Ichthys project managing director Louis Bon says this innovative subsea infrastructure was ‘an excellent example of what collaboration in the oil and gas industry can achieve’.

The subsea fibre optic cable system is tipped provide superior reliability and quality over other available communications solutions such as satellite links.

Prelude FLNG workers will benefit from new subsea cable

GRAY RAMPS UP support for floating LNG SHADOW RESOURCES MINISTER Gary Gray wants Australia to adopt floating LNG technology as an opportunity to capitalise on innovation to drive skills and productivity.

“We need to embrace floating LNG and the innovation that comes with our GARY maritime engineering excellence, just as GRAY we embraced floating oil production in the Timor Sea in the 1980s,” Gray says.

“Floating LNG is an opportunity for us – Australia’s industrial designers, scientists, operators, mechanics, petroleum engineers, clerks and marine engineers – to shine.”

The former resources minister says it would be ‘foolish’ not to embrace FLNG when future onshore LNG projects look remote and more cost-competitive gas markets were opening up.

Price is a growing issue for the world’s largest LNG buyers

www.amma.org.au | Spring 2014 |

– Japan and Korea – and a recent deal will see Russia pipe 38 billion cubic meters of natural gas to China each year for 30 years.

“I cannot recall the last LNG project that came in on the budget that its proponent first published... and (expansions) appear increasingly unlikely as projects wrestle with costs, productivity and price-wary markets,” Gray says.

“Cheaper to build, faster to market; FLNG obviates the need for costly and lengthy pipelines, the construction and eventual decommissioning on onshore plant and associated harbour facilities.

“It can be suitable for remote, smaller gas fields that otherwise would not be developed, and has a much smaller environmental footprint than onshore development.

“And as can be seen from Prelude, it comes with far less regulatory risk, with only 13 conditions attached to that project as opposed to the thousands attached to other onshore projects.”

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ECONOMY & FINANCE

POSITIONING FOR THE next wave of prosperity Economic analysis points to Australia continuing to benefit from resources activity as long as government and industry work together on investment, productivity and workforce participation solutions.

IF THE CONSTRUCTION phase of the ‘resources boom’ is a tripled layered chocolate cake, then the production phase is more like a low-GI diet, according to prominent Perth-based economist Matt Judkins.

The Deloitte Access Economics partner says investment in major resource project construction has arguably been the largest contributor to the Australian economy over the past five years.

“It’s a bit like a sugar hit. When you go up, you eventually have to come back down again and that is the transition we are going through at the moment,” Judkins says.

Food analogies aside, Judkins sees the ramping up of production as good news for the economy.

“This is arguably the largest part of the boom. It’s got literally decades to play out and is when we actually make the most of all that investment and spending on infrastructure, and start exporting to the world,” he says.

With resources construction coming off a peak, Deloitte forecasts national growth to remain ‘pretty flat’ at about three per cent, with a narrowing of the two-speed economy.

“We expect the resource states to come back to the pack a bit.

We’re forecasting a drop in Western Australia’s GDP below the national average over the next 12 to 18 months,” Judkins says.

“But what we expect to see is that after a period of transition, the resource states will again take the mantel of the fastest growing states in the country over the longer term with around four per cent (annual) growth going forward.”

While Deloitte forecasts five key sectors – agribusiness, gas, wealth management, tourism and international education – to be

MATT JUDKINS DELOITTE ACCESS ECONOMICS

www.amma.org.au | Spring 2014 |

drivers of prosperity over the next two decades, Judkins believes a greater dialogue is needed between governments and business to strengthen the resource industry’s economic position.

“Part of that dialogue is really about how to attract investment. We don’t have as many projects coming through the pipeline and we really have to focus on ensuring that pipeline stays robust,” he says.

“The way we do that is to make sure we’re competitive with other nations that have similar projects and might be able to attract that capital due to being lower cost or higher productivity.”

Australia’s aging population is also expected to impact economic growth as skills exit the workforce, but this can be counteracted by focusing on productivity and participation.

Judkins notes that resource industry labour productivity has been around -6 per cent to -7 per cent year-on-year since the early 2000’s, however he expects productivity to pick up as more projects come online.

“It is something which we really need to focus on to attract that investment,” he says.

“Just a one per cent gain in efficiency adds about $14 billion to the productive capacity of a nation – that’s a huge thing to focus on. It is one of those few areas where we can really gain a lot of value.”

Reaffirming resource employers’ efforts to boost workforce gender diversity, Judkins says increasing female participation will have a marked effect on Australia’s economic outcome, referring to Goldman Sachs research showing Australia could increase its GDP by 13 per cent or $180 billion, if it relaxed the gap between male and female participation rates.

He also outlines the opportunity to effectively transition workers from construction to production roles.

“Obviously there is going to be an impact on the number of projects in the pipeline and notwithstanding any other major changes, people will be dropping out of the construction sector,” he says.

“But there are people with trades and qualifications that can be used in operations.

“There’s some great dialogue going on at the moment with government and private enterprise about how to make that happen and reduce red tape and other regulatory issues to ensure that those people are able to transition smoothly between the two phases.”

While competitiveness, productivity and participation issues have long been priority areas for resource employers, Judkins’ analysis is further confirmation of the high stakes in getting both policy settings and workplace practices right.

ECONOMY & FINANCE

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$48 TRILLION NEEDED FOR global energy demand MEETING THE WORLD’S growing need for energy will require more than $48 trillion in investment to 2035 and this won’t happen without prudent and stable government policy, says the France-based International Energy Agency (IEA).

The IEA’s World Energy Investment Outlook indicates the annual investment in energy supply of $1.6tr needs to rise steadily over the coming decades towards $2tr.

Annual spending on energy efficiency, measured against a 2012 baseline, needs to rise from $130 billion today to more than $550bn – or a cumulative global investment bill of more than $48tr.

“The reliability and sustainability of our future energy system depends on investment. This won’t materialise unless there are credible policy frameworks in place as well as stable access to long-term sources of finance,” says IEA executive director Maria van der Hoeven.

“There is a real risk of shortfalls, with knock-on effects on regional or global energy security, as well as the risk that investments are misdirected because environmental impacts are

not properly reflected in prices.”

According to the IEA, renewable energies now account for around 15 per cent of global investment flows each year, but the majority remains related to fossil fuels.

IEA chief economist Fatih Birol says policy makers face increasingly complex choices as they try to achieve progress towards energy security, competitiveness and environmental goals.

“These goals won’t be achieved without mobilising private investors and capital, but if governments change the rules of the game in unpredictable ways, it becomes very difficult for investors to play,” he says.

The IEA report also attributes global increases in costs for recent LNG projects largely to Australia, where seven major LNG projects are under construction.

It says simultaneous project construction; an appreciating dollar; technical complexities; and remote locations have contributed to rising costs in Australia, whereas the United States appeared to be free from these pressures.

| Spring 2014 | www.amma.org.au

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ECONOMY & FINANCE

GREEN PAPER INVESTIGATES northern potential BOASTING VAST EXPORT potential and untapped natural resources, Australia’s Top End is now the focus of a federal government green paper on economic development.

The report was tabled by the Australian Parliament’s Northern Australia Committee which has been tasked to identify opportunities for greater prosperity in the northern region.

“The committee will identify key development projects, strategies and ways by which governments can stimulate development and unblock impediments,” says chair Warren Entsch.

“There is potential to expand the resources sector in the north as well as introducing more intensive agriculture, horticulture, and aquaculture.”

“There are (also) a number of major impediments to economic and social development. These include the absence of economic infrastructure; the cost of power and water; access to telecommunications; land tenure arrangements; lengthy approvals processes and the lack of consistency of processes and requirements between jurisdictions.”

Minister for Infrastructure and Regional Development Warren

Truss believes Darwin is the ‘linchpin’ of northern Australia’s development.

“Darwin is shaping as Australia’s gateway to Asia – one of the fastest growing regions in the world, which will soon be home to half of the world’s middle-class by 2020,” he says.

“This Green Paper reminds us that northern Australia is vital to our national economy, with 55 per cent (or $121 billion) of Australia’s exports shipped from our northern ports. The Northern Territory has one of the lowest unemployment rates in the country and investment activity is set to increase by 7 per cent in 2014-15.

Truss says the value of exports through Darwin’s port has increased with an average annual growth rate of more than 12 per cent a year over the five years to 2012-13.

“And there is potential for increased exports from current and new mines in the Northern Territory, LNG from the Browse Basin and growing live cattle and beef exports,” he says The committee is continuing public hearings and will table its final report and recommendations in September.

Northern Australia is the focus of a federal green paper on economic development

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ECONOMY & FINANCE

51

$10BN ADANI coal mine approved AUSTRALIA’S RESOURCE INDUSTRY has welcomed the federal government’s environmental approval of Adani’s $10 billion Carmichael Coal Mine and Rail Project in Central Queensland’s Galilee Basin.

The proposed thermal coal project is now on track to become Australia’s largest coalmine and one of the largest in the world with a 60 million tonne per annum capacity over a 60 year lifespan.

Situated about 160 kilometres north-west of Clermont, Central Queensland, the project would deliver an estimated $2.97 billion per year to the state economy and create about 2,500 jobs during construction and over 10,000 total employment opportunities.

Scott Barklamb, executive director policy and public affairs for AMMA, says the development was ‘extremely positive’ for both the national resource industry and for Queensland in particular.

“This project has the potential to bolster the state’s economy for a generation,” Barklamb says.

“As many of Queensland’s major LNG and mining projects move into production over the next 12-18 months, new

investments of this scale are necessary to prolong demand for construction skills and ease the transition toward a long term operations-based workforce.”

According to Adani, the project comprises a greenfield coal mine including both open cut and underground mining, onmine infrastructure and associated mine processing facilities as well as offsite infrastructure. A new rail line will connect to an existing system for export.

The depth of process and rigour in which the federal government has taken to balancing environmental needs with this important economic development is demonstrated by the 36 strict conditions placed on the project.

“The absolute strictest of conditions have been imposed to ensure the protection of the environment, with a specific focus on the protection of groundwater,” says environment minister Greg Hunt.

“This decision sends a positive message to the world that Australia remains a very attractive destination for economically and environmentally responsible investment.”

| Spring 2014 | www.amma.org.au

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ECONOMY & FINANCE

JAPAN-AUSTRALIA FREE TRADE A BOOST for resource exports and investment AUSTRALIA HAS STRENGTHENED ties with one of its most valuable trade partners after signing the Japan Australia Economic Partnership Agreement (JAEPA).

Japanese Prime Minister Shinzo Abe describes the trade agreement as a catalyst to spark further positive changes as Japan’s economy rapidly advances.

“Opening up Japan’s economy and society is one of the major engines for my growth strategy. I am now working to reform systems and norms that have not changed in many decades,” Prime Minister Abe told the Australian parliament in a rare English-language address.

“Japan will grow by increasing its productivity while keeping good fiscal discipline. To do that, I will become like a drill bit myself, breaking through the vested interests and the norms that have deep roots. Reforms are now starting in the fields of agriculture, energy policy and medicine.”

Australian Prime Minister Tony Abbott says Australia owes much of its economic prosperity to its trade and investment with Japan over the last 50 years.

“Japan is our third largest source of foreign investment; it was our largest trading partner for more than 40 years and Australian resources such as coal and iron ore have helped Japan become an industrial powerhouse,” Prime Minister Abbott says.

“Freer trade means more economic growth and more economic growth means more prosperous people and fairer societies.”

AMMA chief executive Steve Knott says the JAEPA is a significant milestone for the national resource industry, which currently contributes about 80 per cent of total export goods to Japan.

“Japanese demand for coal, iron ore and natural gas has been a strong driver of Australia’s export revenue and economic prosperity, with $36.2 billion worth of trade in these commodities in the 2012-13 financial year alone,” Knott says.

“The JAEPA is perfectly timed with Australia emerging as a global powerhouse of LNG production and bullish economic growth likely to see Japanese energy demand increase exponentially.

“It is vital that after a record decade of resource project investment that Australia positions itself to be a primary supplier of energy to the major economic powers of the Asia Pacific region.

“We have the natural resources, the expertise, skills and technology.”

As part of Prime Minister Abe’s four-day visit to Australia in July, he accompanied Prime Minister Tony Abbott on a tour of iron ore operations in the Pilbara.

The JAEPA is the first free trade agreement that Japan has made with a major developed economy.

Australian PM Tony Abbott and Japanese PM Shinzo Abe visit the Pilbara

www.amma.org.au | Spring 2014 |

ECONOMY & FINANCE

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TRADE UNION MEMBERSHIP at record low THE NUMBER OF Australians choosing to join a trade union has fallen to a record low.

Australian Bureau of Statistics (ABS) data released mid-year reveals 17 per cent of Australian employees were members of a trade union as of August 2013, down from 18.3 per cent in 2010.

The drop in almost 93,000 members to 1.74 million comes despite the employed labour force having grown by 4.9 per cent or 483,500 persons across the same period.

Scott Barklamb, executive director of policy and public affairs for resource industry employer group AMMA, says there has been a consistent long-term trend away from trade union membership in Australia.

“Today’s union membership levels are considerably down from highs of more than 40 per cent less than 25 years ago,” Barklamb says.

“The decline is particularly stark in the private sector, with just 12 per cent, or fewer than one in eight Australians working in private enterprise now joining a trade union.”

In the resource industry, the concentration of union membership in the mining category (including the hydrocarbons and allied sectors) now sits at 16 per cent.

“This represents a significant fall of 2.7 percentage points from 18.7 per cent in only the 12 months to August 2013,” Barklamb explains.

“It also sends a very clear message about the framework that resource industry employees want to work under, with the overwhelming majority preferring a direct, constructive relationship with their employers, without union involvement.”

Union membership data for resource industry subcategories indicate: • Coal mining has the highest levels of unionisation, at 39.9 per cent of employees. This is a significant fall from the preceding year’s data which showed 44.1 per cent of coal industry employees as union members.

• Unionisation in all other sections of the

industry is significantly lower including oil and gas extraction (13.9 per cent), metal ore mining (8.3 per cent), and exploration and mining support services (11.2 per cent).

• Construction records an overall figure of 15.9 per cent, but when examined at the sub industry level includes heavy construction and civil engineering at 25 per cent.

Trade unionism is also becoming increasingly the domain of older employees

with the distribution of membership concentrated in those over 45.

Consistent with the increasing age of union members, is their time in the union.

67.5 per cent of union members have held membership for five years or more.

The ABS has confirmed trade union membership data will now be collected and reported biennially instead of annually as part of changes to its survey on employment characteristics.

| Spring 2014 | www.amma.org.au

EVENTS 54

EVENTS

SEPTEMBER

OCTOBER

Monday 8 – Thursday 11 Advances in Geo-logging is an intensive four-day program on the latest logging techniques and how they can be used to improve geo-investigation, planning, and reduce risk, costs and uncertainty within the mining sector. Held at Mineral Resources Tasmania facilities, Hobart.

More into at: www.utas.edu.au

Wednesday 8 – Thursday 9 The Future of Industrial Relations will analyse the current state of IR in Australia. AMMA executive director Scott Barklamb will present on the influence of IR policy on labour productivity in the resource industry. Held at Radisson Blu Plaza Hotel, Sydney.

More info at: www.informa.com.au

Thursday 11 The SkillsDMC 2014 Annual Conference, named Resources and Infrastructure Industry: Quality Outcomes Through Skilling Partnership, brings together national and international industry practitioners and government stakeholders to share best practice and shape future workforce planning and development initiatives. Held at the Sofitel Brisbane Central.

More info at: www.skillsdmc.com.au Tuesday 16 Delegates at the 2014 AMMA Skilled Migration Conference will hear the latest on the resource industry’s evolving skills landscape, recent legislative and offshore visa changes and employer obligations to ensure compliance. Keynote speaker: Senator Michaelia Cash, Assistant Minister for Immigration and Border Protection. Perth CBD. More info at: www.amma.org.au

Thursday 16 As special guest speaker at the Brisbane Mining Club, Dr Vanessa Guthrie, managing director and CEO of Toro Energy Limited will give insight into managing the ASX listed uranium-focused explorer and project developer. Toro Energy’s $269 million Wiluna project is set to become Western Australia’s first uranium mine.

More into at: www.brisbaneminingclub.com.au Monday 27 – Tuesday 28 The Hunter Valley Longwall Conference is the annual meeting point for the underground coal industry to discuss the latest advances, swap experiences and learn from the best operators in the business. Held at the Crowne Plaza Hunter Valley.

More info at: www.longwallconference.com.au Tuesday 28 – Wednesday 29 At this year’s National Mine Rescue and Emergency Management Forum, senior level stakeholders will gather to explore new technologies and strategies being used to gain efficiency in rescue and emergency planning. Held in Brisbane (venue TBC).

More info at: minerescue.com.au Wednesday 29 – Thursday 30 With back-to-back presentations across two auditoria from key resource industry experts and participants, the two-day Mining 2014 Resources Convention will cover economic overviews, investment, geoscience, exploration, technology and more.

Held at the Hilton Brisbane Hotel.

More info at: www.verticalevents.com.au

NOVEMBER Senator Michaelia Cash, Assistant Minister for Immigration and Border Protection will speak at the AMMA Skilled Migration Conference

Monday 22 – Saturday 26 The International Mining and Resources Conference (IMARC) brings together national and international mining leaders, policy makers, financiers, technical experts, innovators and eductors to discuss the continuously evolving resource industry.

Presentations will cover policy, investment, and technology and skills. Held at the Melbourne Convention Centre.

More info at: www.imarcmelbourne.com

www.amma.org.au | Spring 2014 |

Wednesday 19 Back by popular demand, the resource industry’s national gender diversity initiative the Australian Women in Resources Alliance (AWRA), will again hold a one-day event dedicated to increasing women’s participation and influence in the resources, related construction and allied service sectors. Held in Perth CBD. More info at: www.amma.org.au/awra Tuesday 25 – Wednesday 26 The annual Mining South Australia Conference shares the latest insights into the region’s project developments, mining operations, exploration, infrastructure, ports and rail. Speakers include State Minister for Resources and Energy, Tom Koutsantonis. Held at Middleback Theatre, Whyalla.

More info at: www.informa.com.au

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BUSINESS PARTNER DIRECTORY

www.amma.org.au | Spring 2014 |