Motion
HON MARTIN ALDRIDGE (Agricultural) [1.12 pm]: I move —
That this house —
(a) notes that the introduction of the Building and Construction Industry Training Fund has supported the training and employment of more than 48 000 apprentices and trainees and has helped over 340 000 industry workers to upgrade their skills;
(b) notes the “Review of the Operation and Effectiveness of the Building and Construction Industry Training Fund and Levy Collection Act 1990” of June 2014 that recommended the amendment to regulations to withdraw the current exemption from the payment of the levy applying to engineering construction projects in the resources industry;
(c) supports the amendment of regulation 3AA of the Building and Construction Industry Training Fund and Levy Collection Regulations 1991, therefore requiring construction projects in the mining and petroleum industry to contribute to the training and skills development in the building and construction industry; and
(d) calls on the government to immediately amend the regulation to support local job creation and skills development across the building and construction industry.
[Speeches and comments from various members]
HON ALISON XAMON (North Metropolitan) [2.05 pm]: I rise on behalf of the Greens to speak to this motion. I am very pleased that it has come to Parliament because I think it is an important issue that is worthy of quite a bit of consideration. I will say a little more about that during my contribution. We know that large-scale construction projects are occurring in Western Australia using skilled and trained construction industry workers but some projects are not contributing to the Building and Construction Industry Training Fund depending on which sector the construction activity is deemed to belong. Generally, the construction industry believes that all construction projects should be contributing to this fund, regardless of which sector they belong to. Generally speaking, the resources industry has indicated that it should not be required to contribute to the fund for a number of reasons, which I will detail later. We know that exemptions for the levy for construction work exists for the resources sector, the agricultural sector and the government sector. All these exemptions have occurred via regulations. A review on this issue in 1994, which is how long this issue has been floating around for, noted that the mining, petroleum, agricultural and government sectors had not been fully consulted prior to the levy being enacted. The exemption appears to relate to difficulties in the broadness of the definitions of “construction industry” and “construction work”. I also note that the fund did not receive or even enforce the collection of levies from these industries in its first years of operation. I understand that this is because legal advice at the time indicated that the application of a levy to these industries was conflicted.
Previous contributors have referred to the 2014 Stratton report. That also recognised that a lot of stakeholder engagement and discussion would need to be had prior to lifting the exemption on the resources industry. I am aware that it is proposed that two amendments may possibly be moved to this motion. One relates to taking a fairly measured approach to how we want to go down this path. The other ensures that we have a mechanism by which we can fully evaluate and assess the impacts of any changes. I will speak a bit more to that. Hopefully, I will get a chance to speak if the amendments are moved as well. Both of them relate to the need to ensure that we are fully cognisant of what any changes may look like. We know that construction trades are well represented on the National Skills Needs List, with the note that WA currently does not seem to have an issue, which is supported by most construction trades being listed as either “Not identified as a priority” or “Priority 3” on the state priority occupation list. I note that priority 3 is for industry or regional level priorities. The National Centre for Vocational Education Research’s historical time series shows that the number of construction trades workers training in WA has reduced over time from a peak of 5 300 in 2008 to 3 900 in 2017; that is not including the electrical trades. Building and construction apprenticeships and traineeships have been identified as one of the funding priorities by the Skilling Australians Fund. I note that as of this month the Migration Amendment (Skilling Australians Fund) Bill 2017 is still before the Senate. This is the bill that was supposed to provide the funding for the states as of July 2017. This is in no way good enough. I have spoken before about my grave concerns with the lack of commitment that the federal government is showing to training as a whole and the pressure that is putting on funding and the sector. It is unacceptable that the state government is being expected to fill that hole. We cannot talk about this whole issue without also noting the way that the commonwealth government has failed us in these areas and continues to fail us. This is on top of the fact that we continue not to get our fair share of federal funding in a whole range of areas.
I go back to the Building and Construction Industry Training Fund. The training fund offers a range of base grants for employers, depending on the qualification for which the employee is being trained, their location and also, importantly, whether it is assisting to meet a number of diversity indicators such as whether people are Aboriginal or female. The 2016–17 annual report listed income of $32.2 million. There were 5 923 apprentice subsidies offered and that came to $16.46 million. There were 7 704 skills training subsidies offered and that came to $2.6 million. There were 8 843 occupational safety and training subsidies—very important work—which came to $1.6 million. There were also career promotion and skill-to-skill scholarships grants, presentations and various trade courses, which came to $2.5 million. We also note that additional funding was given to capital expenditure to support the building of the new Construction Futures Centre, which was worth $4.2 million. There was also research and development in things such as training needs analysis for commercial construction, waterproofing qualification skillsets, business skills for apprentices, reviews of training packages and relevancy, but I note that vocational education and training in schools ceased in December 2016. It is important that we understand and think about where the levy applies. The project owner is required to pay the levy and I note that the project owner is the lead project owner when the client is contracting out some or all elements of this work. That is currently for works estimated to cost more than $20 000, although I acknowledge, as others have already indicated, that we have a bill coming to the Parliament and this may change, assuming the bill goes ahead, to be potentially more than $45 000. Construction work in the levy legislation is defined by the Construction Industry Portable Paid Long Service Leave Act 1985 and the Building Act 2011. As I said, there is currently an exemption in place by regulations for engineering works in the resources sector, the agricultural sector and the government sector.
The Building and Construction Industry Training Fund has been reviewed multiple times, most recently in 2008 and 2014, and both recent reviews recommended that the exemption for the resources industry be removed. Reviews included a cross-section of building and construction stakeholders, but I think it is significant that they noted that there was no-one from the resources industry. This issue has been raised with me and has created a fair amount of disquiet. Representatives from the resources industry certainly seek an opportunity in a more formal mechanism to be able to have their concerns heard. Again, I allude to a proposed amendment to establish a standing committee that could potentially look into some of the issues being raised through the course of this debate. Perhaps that would be a step towards ensuring they feel they have had the opportunity. Having said that, I also take on board the comments that the resources sector is not shy in contacting decision-makers and members of Parliament to make it quite clear where it stands, and, indeed, my office has also made it a point in preparation for these matters to consult with industry. I note that the most recent reviews also proposed changes to the purpose of the fund, removing the quality of training improvement elements and formalising the research and advice functions. There is a fair bit that needs to be examined.
As we have said, currently the levy applies to residential and commercial buildings on resources sector projects, so that is limited to construction such as worker housing, office blocks and sheds. The levy does not apply to engineering construction on resources sector projects, so we are talking about the bulk of where construction occurs—roads, earthworks, tunnels, drilling rigs, silos, storage liquids, electrical plants and basically the really big ticket items. Should the exemption be lifted, large mining construction projects could potentially inject many millions of dollars into the BCITF, and I have already outlined the sorts of really important works that the BCITF is undertaking. The Stratton review recommended that both the exemption and also, interestingly, a cap be considered. The fund currently cannot be used to provide subsidies to resources sector companies regardless of whether the training provider would ordinarily be eligible for a grant. It is important to at least put on the record what the mining industry has said, because we need to do that. As I have mentioned, my office has been in communication with representatives from the mining industry as well and it has relayed that the resources sector is not the construction sector and it does not directly employ construction workers and does not receive a direct benefit from construction training. However, it is clear that a lot of construction work as defined in the legislation is taking place on resources sector sites. It is acknowledged in a number of government documents that construction workers move between mining construction, residential construction and commercial construction— for example, the labour market snapshots produced by the Department of Training and Workforce Development and the “WA State Training Plan 2017–2020” background paper. Again, the mining industry says that the needs of the resources industry are not met by construction training and that further training must be undertaken to provide employees with the skills needed to work in the resources sector; for example, electricians needing to work with voltages higher than domestic voltages and workers involved in pit construction using dynamite need to have specialised and additional training. Again, the mining industry says that on large engineering construction projects in the resources sector the design, construction and management of the project would ordinarily be handled by a specialist contracting company under an engineering procurement and construction management contract. I note that this contractor will often subcontract the construction elements of the project to one or more subcontractors and the main EPCM contract will usually include training as a requirement. There are a small number of BCITF-eligible qualifications provided in the resources sector, notably the certificate III in civil engineering and the certificate III in electrotechnology. The Chamber of Minerals and Energy advised me that it is undertaking an internal training survey at the moment and that the early results show that the resources sector spends about 3.5 per cent of its payroll on apprentices and trainees. It currently prioritises and provides sufficient support to diverse groups of apprentices and trainees such as Aboriginal trainees and women, preferably if they live locally. It has nearly doubled the average national rate of successful completion of apprenticeships and traineeships. It stated that it ensures apprentices have the opportunity to work elsewhere to complete their qualifications with skills that cannot be picked up on mine sites. For example, it will ensure that people are still able to learn skills to work with things such as domestic hot water systems and fridges. The CME pointed out the numerous WorldSkills Australia awards that it has received and the high numbers of on-the-job and full-time trainers that it has working within its specialised organisations. It also indicated that it is now engaging more closely with the training sector to provide courses that are directly relevant to training needs in the resources sector.
The sector as a whole tends to train foundation skills and then specific skill sets as needed. This sometimes means units of competency and statements of attainment, but they will not necessarily lead to a recognised qualification. We need to preference tailor-made courses, which may not be suited to the way that the Australian Quality Training Framework works. This motion will not necessarily improve the quantity or quality of training in either construction or the resources industry. The Building and Construction Industry Training Fund does not provide employer subsidies in the qualifications needed in the resources sector so, in that sense, there will be an additional training cost of no value to the sector and smaller companies might shift their training to ensure that they can access the subsidies and thus provide training that is not necessarily suited to their workplace. That starts to raise some hypothetical questions about whether the levy is the best way to ensure that training is carried out. Should a decision be made to lift the levy, a long lead time may be required to reflect the lead times of project development. These are the sorts of details that could well benefit from further examination and an opportunity to unpick this.
I also want to talk about what the Construction, Forestry, Mining and Energy Union had to say about this. As a significant stakeholder, its members were consulted and their voices also deserve to be heard in this place. They indicated that they were very satisfied with the Stratton review and believed that it was a fundamentally sound process that resulted in a sound document. They support the recommendations made by the review. They were quite clear that they supported this motion in its entirety. They believed that the resources sector should contribute to the BCITF and to the training of construction workers. They were also very clear that, in their experience, moving between industries—whether it be domestic construction or the resources industry—is very commonplace and they felt that the resources industry had become a net beneficiary of the level of expertise that arises from people who are trained via the BCITF process.
We have talked about how training young people is an industry-wide responsibility. The BCITF helps to ensure the flow of trained young building and construction workers. The levy helps to share the cost of training beyond simply those employers willing and able to take on an apprentice or a trainee. It becomes a very important way to ensure that we maintain our ongoing skills base, particularly for young people, although I also note the comments about mature-aged workers receiving opportunities for training.
It is useful to compare the situation in other states. In South Australia, building work includes building or construction work associated with any operation under the Petroleum Act, the Petroleum (Submerged Lands) Act, the Mining Act, the Offshore Minerals Act or the Opal Mining Act. It requires a contribution of 0.25 per cent for projects over $40 000. In Tasmania, a structure includes a structure, plant or facility associated with the production, storage, conveyance or distribution of oil, gas, coal or other minerals. It requires 0.2 per cent for projects over $20 000. In Queensland, the building and construction industry training levy and the long service leave levy are not payable for building and construction work that is also resources operations work. In the Australian Capital Territory, building work refers only to buildings and building-related items such as fences and pools. No engineering construction work, regardless of the sector, is considered under its legislation. In Victoria and New South Wales, there is not even a training fund.
It is clearly possible for building and construction training to take place in a range of environments, from having no levy through to explicitly ensuring that all construction activity on resources projects is included, because there are a variety of different approaches around the country. It seems manifestly unfair that only some large construction projects attract the levy when they will all require skilled construction workers to reach completion, regardless of the client industry. Lifting the exemption on the resources sector without addressing the reasons that those exemptions were first applied seems to be potentially problematic and there is a concern that we may repeat the same sequence of events that led to the need to have the exemption in the first place. That really goes to the heart of making sure that if we are going to go down this path, we should examine it really closely and make sure that there are no unintended consequences of making these changes, bearing in mind that the previous reviews have recommended that we go down this path. Lifting the exemption for one of the exempt industries alone, rather than making sure we fully assess the reasons and need for all the exemptions, can look like it is policy on the run. There is no value in removing the exemption and putting us back in the same position we were in in the early 1990s when those sectors were simply not paying the levy. It would certainly be counterproductive to repeat the rampant uncertainty about whether the levy could be enforced.
To be clear, the Greens broadly support the review’s recommendations that exemptions to the levy be undertaken, but we need to make sure that we inquire into why the exemptions currently exist and why they occurred in the first place, and whether they should be lifted in any or all three of the industry sectors that currently have an exemption. Also, what, if any, changes would need to be made to the legislation and regulations to ensure clarity and enforceability of the definition of building and construction industry and activity? The BCITF is an important fund and we need to ensure that it receives a sufficient amount of money. It is doing important work. I particularly note the comments made by the mover of the motion, Hon Martin Aldridge, who talked about the need to ensure a significant level of revenue comes through to ensure the activities of the fund can effectively operate in such a way as to move between the boom and bust cycles of the economic activity in this state. I think there is a lot of merit in that comment. We need to well and truly pursue this issue. I think that there is great appeal in lifting the levy for the resources sector, but it has to be done cautiously. We must make sure that we not only consult, but also are seen to consult, because the previous report identified that as a deficit. As such, again I anticipate that an amendment to the motion will be moved, because it will be useful to set up something like a select committee to fully investigate these matters so that we can get it right. Likewise, I also support exercising initial caution so that we do not commit ourselves to a position too hastily. It is on this matter that I expect general agreement will come from across the chamber from the Greens on a whole range of elements. This is a really important motion and I am glad that it has been brought to this house for our consideration.
[Speeches and comments from various members]
Debate interrupted, pursuant to standing orders.