China’s solution to our construction skills shortages: Gottliebsen

Commercial building and construction is an area of Australian industry that has been insulated from import competition, which has allowed bad work practices to emerge.

There is now at least a chance that this will change, in the longer term, because the Chinese want to introduce ‘import competition’ into Australian infrastructure projects. Australia’s largest commercial builder, Leighton, and the nation’s building unions better watch out.

One of China’s fast-growing export industries is its ability to construct mineral treatment plants and infrastructure, like ports and towns, in foreign countries. The Chinese provide the bulk of the labour which leaves the country after the project is completed. If we allowed them to export this skill to Australia we could develop the infrastructure behind the enormous projects planned for Queensland and WA at a fraction of the Australian-made cost.

It sounds crazy but according to The Australian’s Michael Sainsbury, while Prime Minister Julia Gillard is in China she will be approached to allow Chinese construction companies to tender for our infrastructure.

Australia’s building unions are moving in the opposite direction and want to transplant to onshore mineral and infrastructure projects the concessions granted by Leighton in the Victorian desalination plant, where the unions will effectively control the hiring of workers and contractors and workers receive pay rates in excess of $300,000 a year.

Resources Minister Martin Ferguson can see the danger of this union push and is examining the creation of Enterprise Migration Agreements (EMAs) “for ‘mega’ resources projects so that construction staff can be brought to Australia during the critical construction phase”.

Ferguson said: “The Government has indicated its in principle support for EMAs and is currently consulting on the detail of this recommendation with industry and relevant stakeholders.”

Bringing in staff for an Australian contractor is a long way from what the Chinese are after, but it’s a significant first step. The Chinese have seen what we do here and will tell our PM that their tenders will be pitched lower that those put forward by companies like Leighton, even though the Chinese are guaranteeing to pay workers Australian pay rates.

The Chinese say they will also do the job 50% faster. What the Chinese have worked out is that it is not so much the pay rates that boost the cost of Australian-built infrastructure, but the work practices.

With almost 100% Chinese labour, there will be no problems with work practices and the Chinese are prepared to hold half the labour payments in trust. The Chinese workers will need to return home to receive their entitlement. The Chinese tenders will substantially boost Australian exports because they would enable higher output via better ports and towns, etc.

The Chinese have done this in Africa much to the annoyance of the locals who are unemployed. But we have low unemployment, a militant set of unions, and building companies that are having great difficulty managing big projects.

It is unlikely that Julia Gillard will give the green light to what China is proposing but if Australian tenders are too high and too slow because of the fear of militant unionism then – if there is a change of government at the next election – Tony Abbott might allow the Chinese to tender.

After all, the only difference between using Chinese workers to make clothing and cars and build ports is that with ports they will be paid Australian wage rates.

This article first appeared on Business Spectator.