Professional Edge [Edition six] with Industry Briefings

Issue 06 August 2015

THE ROAD AND RAIL INFORMERINFORMER

GET AHEAD AND GET REWARDED – 2 NEW MEMBER SERVICES

AUSTRALIAN INFRASTRUCTURE AUDIT

EDITORIAL

INFRASTRUCTURE

RPEng successfully launches in VictoriaCheck out the gallery on Page 10

1

Cover photo:

Treasurer launches RPEng in Victoria

More on page 9

Publishing Details

Professionals Australia (registered as the Association of Professional Engineers, Scientists and Managers Australia).

GPO Box 1271, Melbourne, 3001. Level 1, 163 Eastern Rd, South Melbourne, VIC 3205. Telephone: 1300 273 762 Email: [email protected] Web: professionalsaustralia.org.au

Professionals Australia Board of Management

President Bill JacksonSenior Vice President Andrew RussackVice President Maria FuchsVice President Col HackneyVice President Greg McMahonSecretary Robyn PorterTreasurer Olaf Reinhold

Chief Executive Officer Chris Walton

Professional Edge

Professional Edge is published by Professionals Australia.Editorial contributions and feedback welcome. Contact [email protected] for electoral comment is taken by Chris Walton, 163 Eastern Rd, South Melbourne, VIC 3205.The pages of Professional Edge are open to contributions from all members and from other sources. Comment in these pages does not necessarily reflect the opinions or polices of Professionals Australia or its officers.

Creative Commons Licence

The text of Professional Edge, being the magazine, is licensed under Creative Commons. The images cannot be republished without prior permission. www.creativecommons.org

mailto:[email protected]

http://professionalsaustralia.org.au

2

Contents

9

A word from the President

A word from the CEO

Australian Infrastructure Audit findings

Unlock pharmacists potential

Treasurer launches RPEng in Victoria

Gallery

Post-employment Confidentiality

Understanding the Golden Handshake

Torrens University acquires Chifley

Labour hire agreements

Women in IT scholarship

Professionals working in later life

Events and seminars

Get more with HCF

3

6

7

8

9

10

11

13-15

16

17

18

19-20

21

22

Members hearing from Victorian Treasurer at RPEng launch Victoria.

3 15 18

Stopping the waste Infrastructure findings Confidential Information

3

In his editorial in this magazine, your CEO Mr Chris Walton introduces two new services which Professionals Australia will be implementing in coming months; a Financial Education and Advice program (FE&A), and the Certificate of Professional Practice short-course (CPP). Given Chris has addressed the services aspect, I will provide an update on our national infrastructure campaign: Better Infrastructure.

The Better Infrastructure campaign is centred on the argument that government outsourcing of engineering and technical expertise is resulting in poor-quality and high-cost infrastructure. Every road we drive on, every bridge we cross, every tunnel we enter relies on the input of engineers. Every school, hospital, sports stadium, even the submarines and ships that ensure our defence capability, all reply on the expertise of our world-class engineers.

Successive governments, in efforts to be fiscally responsible, have cut and cut budgets and in the process cut many engineers. There are now not enough engineers working in governments across Australia to effectively scope, design, manage and assess infrastructure projects. This means our public infrastructure is deteriorating, and costing the taxpayer billions of dollars each year in unnecessary works.

Think about it like this: when you buy a used car, you want a mechanic to look over it and make sure you’re not buying a lemon. Well governments no longer have enough engineers to turn to, meaning there is no way to know if the roads, hospitals, schools and other infrastructure being built, infrastructure we rely on, are lemons or not. Even the private sector thinks this is a problem. Governments don’t need to look far for solutions that have the support of industry, employee and employer groups.

As National President of Professionals Australia, my role is to ensure that our association continues to meet the needs of members through relevant services, and represents the interests of members through advocacy campaigns.

Bill JacksonPresident

They just need to be pointed in the right direction, and know that this support exists. The solutions aren’t even that expensive. We know that a minuscule investment in engineering would save huge amounts of money and time. It would see projects better scoped, properly designed and have much greater chance of being delivered on time and on budget.

This is the purpose of the Better Infrastructure campaign: To engineer a change in the politics of infrastructure, and deliver cost-effective high-quality, and importantly, safe infrastructure. The campaign has been in action since the beginning of the year, and in that time we’ve made huge progress – Professionals Australia members, supported by staff, have been meeting with politicians from all sides of government, across the country to raise awareness for Better infrastructure and seek support for the solutions. While these meetings have been very successful, this is just the beginning of the campaign – the next step is to turn that awareness into action. To do that we need to demonstrate to the decision-makers that the issue is more than just an argument on paper in a glossy document.

We need to show politicians that the cost and time blow-outs are real, that taxes are stupidly being wasted, and most importantly, that community safety is at risk.

With this in mind, I put a call out to all members to tell Professionals Australia where you have experienced wasteful infrastructure projects.

To all non-engineers, I encourage you to share this article online and with any peers or colleagues you think might be interested.

Together, we can engineer change.

Stemming the waste in Infrastructure

Editorial - A word from the President

“There are now not enoughengineers working in governments across Australia to effectively scope, design, manage and assess infrastructure projects.”

4

Ensure that your experiences of streamlining and budget cuts are heardComplete our confidential infrastructure waste form at:

http://www.professionalsaustralia.org.au/ advocacy/campaigns/better-infrastructure/

http://www.professionalsaustralia.org.au/advocacy/campaigns/better-infrastructure/

5

Professionals Australia exists to provide support, advocacy and advice, so you can get the respect, recognition and reward you deserve.By working together we can achieve better outcomes so you can get on with making a vital contribution to our community.

We are your association, so don’t hesitate to get in touch.

www.professionalsaustralia.org.au

6

As the CEO of Professionals Australia, it is my responsibility to ensure that in addition to keeping the President happy, your association continues to deliver greater respect, recognition and reward for members. To do this, the association needs to ensure that its member services and offerings are relevant and up-to-date with the needs of the membership. With that in mind, I’m pleased to announce that Professionals Australia has a number of new initiatives on the horizon: 1. Certificate of Professional Practice; and 2. Financial Education and Advice short-course. We are hoping to add these new services at no additional cost to members. These two new initiatives are in addition to Journey Insurance, which is now offered to members as part of your membership.

Through our regular surveying of members, it was realised that additional formal education, as well as Continuing Professional Development (CPD), which has historically been provided and paid for by employers, is decreasing. This is resulting in a gap between the technical skills gained through formal education, and the skills many professionals, especially our young and emerging and mid-career professionals require to get ahead in their profession.

100% of members under 40 are actively pursuing financial goals, but only 14% have a plan in place to achieve these goal.

The first new service, the Certificate of Professional Practice (CPP), is being designed to give members the business and communication acumen to amplify existing qualifications and technical experience and set members apart from the competition.

The structure currently being tested with members involves three levels with each level comprising seven models or units, covering such topics as:

• Business writing; • Presentation skills;• Negotiation skills;• Proposal writing;• Team leadership;• Project Management; and• Many more.

The second new initiative currently being developed is a Financial Education and Advice short-course (FE&A) to help members be financially secure. A recent survey of members under the age of 40, including students, found that 100% of respondents are actively pursuing a financial goal, yet only 14.4% of respondents actually have a plan to achieve these goals. The most common goals include owning a home, owning an investment property or growing wealth through non-property investments. Addressing this divide and providing members with the opportunity to realistically achieve their goals is our first objective of this initiative.

The second objective is to raise members’ understanding of financial topics. From that same survey, we found that of the 12 financial topics proposed, the overwhelming majority have a poor understanding. After consulting with our financial planning partners, the idea is to offering members financial education and advice via short online sessions– the Financial Education and Advice short-courses. Completing the confidential quiz at the end of each topic will supply our financial planning partners with the relevant information to build participants a tailored financial plan. On completion, members will be offered a telephone session with a qualified financial planner, who will take you through your tailored financial plan.

By taking this approach, we will be able to increase your understanding and

knowledge of the financial world, as well as provide a structured plan to help you achieve your financial goals. Feedback has already been sought from the membership, and the findings are being used to shape the short-course. A pilot will be available for testing shortly. Combined with our existing services, such as workplace advice and support, financial discounts through member advantage, market rates and industry updates, and journey insurance, these two new services will truly deliver greater member benefits .

For more information on these new services, or to access any of the additional Professionals Australia member benefits, please contact the team at [email protected]

Get ahead and get rewarded

Chris WaltonCEO

Editorial - A word from the CEO

In this edition of Professional EDGE, Professionals Australia is proud to announce two new member-only services, created to give you greater respect, recognition and reward.

We are currently undertaking a membership questionnaire in relation to the Certificate of Professional Practice (CPP).

If you are interested in participating, either click the link below, or email: [email protected]

www.surveymonkey.com/r/ Certificate_Professional_Practice

https://www.surveymonkey.com/r/Certificate_Professional_Practice

7

World-leading infrastructure is integral to the productivity of the economy. Infrastructure Australia estimates that infrastructure services alone contribute over 13.0 per cent of GDP. However, while this value may seem significant, the audit noted that congestion around capital cities cost the nation an estimated $13.7 billion in 2011. This number, while already shocking, is forecast to swell to a staggering $53.3 billion in 2031 unless swift corrective action is taken to renew Australia’s dwindling infrastructure stock.

Future infrastructure needs are expected to skyrocket, as Australia maintains among the highest rates of population growth in the world. This population growth will place upward pressure on congestion and increase road travel times, as more cars fight for space on our struggling road network and more commuters cram onto our already swelling public transport. The audit also forecasts Australia’s national freight task to rise by around 80.0 per cent between 2011 and 2031. This will place additional strain on arterial roads as road-freight is the dominant form of freight transport across the country. Ultimately, the audit’s forecast for Australia’s quality of life is bleak, unless governments drive strong additional investment in well-planned projects.

The audit makes a strong argument for additional investment. Major investment will be required if Australia wishes to maintain its high-quality of life amid rising population and growing congestion.More importantly, the audit makes several mentions as to how Australia might reverse the trend and improve its infrastructure base. The proposed solutions largely align with Professionals Australia’s Better Infrastructure campaign, calling on governments to place a greater emphasis on planning, rigorous evaluation, and to address

Australian Infrastructure Audit - a Summary of FindingsIn May, Infrastructure Australia released the long-awaited Australian Infrastructure Audit: Our Infrastructure Challenges. The audit strategically examines Australia’s infrastructure needs, emphasising the limitations of the nation’s existing infrastructure, and underlining the need for greater investment and improved planning over the coming years.

Infrastructure

skills shortages. The audit recommends that governments develop a skilled workforce capable of planning and delivering key projects. This process requires governments to be forward thinking, investing in skilled engineers and major projects now, in order to deliver the infrastructure that society will depend upon in the future.

Infrastructure Australia also places the responsibility on governments to drive productivity growth through its management of infrastructure. Key aspects of this process include the efficient management of existing stock, long-term planning, project appraisal and review in order to develop and maintain a pipeline of key projects. The emphasis is also placed on engineering, as the audit underlines the need for continuous improvement to promote modern building practices. This process requires that engineers play a pivotal role in making governments informed purchasers, to ensure that tax-payer dollars deliver the best infrastructure projects possible. Notably, the review calls for detailed post-completion reviews, were knowledgeable engineers address the successes and failures of a project to learn from errors and build upon effective strategies.

Infrastructure Australia has made the first step, calling for greater, smarter investment in infrastructure. The Audit also calls for submissions, to inform the development of a 15 year Australian Infrastructure Plan. It will then be up to governments, to take the initiative and build the infrastructure that the nation so sorely needs.

“Ultimately, the audit’s forecast for Australia’s quality of life is bleak, unless Governments drive strong additional investment in well-planned projects.”

Professionals Australia will be making a further submission in response to the Infrastructure Audit findings - to have your say in our response, please email: [email protected]

8

Unlock pharmacists potential

The announcement shows that policy makers are beginning to listen to employee pharmacists about the importance of medication reviews in the delivery of improved health outcomes.

The final decision made by the FWC will have long lasting impacts on the future of community pharmacy.

There are people in hospitals or suffering at home because there isn’t the access to quality pharmacist services that could have prevented medicine misadventure. Along with an additional 230,000 hospital admissions each year, 1.5 million Australians suffer adverse effects of medicines. Additional funds in this area of healthcare should be welcomed; however we need to ensure that the extra funds get to where there is most need – patient care and not unnecessary administration which was uncovered in the Australian National Audit Office’s Audit into the fifth Community Pharmacy Agreement.

In almost all comparable western countries, community pharmacy has undergone reform in recent years. Politicians and policy makers now have a number of different models to draw on when it comes to deciding on the reforms that Australia should adopt. The extent to which employed pharmacists will be successful in achieving reforms that benefit the profession, patients and community pharmacy, more broadly, depends on the strength of our voice. Pharmacists have a choice: watch the industry continue to deteriorate OR shape a better future by joining PPA and supporting our campaign. There has never been a better time. There has never been greater opportunity.

Pharmacy

Never before has the situation facing community pharmacists been more dire, but never before have so many opportunities for change existed. Professional Pharmacists Australia membership is growing and our efforts to lift standards in the industry continues.

As any employee pharmacist can tell you, people working in pharmacy are being hurt by:

• Salaries that fail to reflect what healthprofessionals should be paid;

• The erosion of conditions with pharmacistshaving to work longer, under increasinglychallenging situations;

• A lack of career progression;• The focus on increasing the volume of dispensing

at the expense of caring for patients.

The current state of pharmacy doesn’t ‘just happen’. Peopledecide to pay low salaries and the pay rates in the current Pharmacy Industry Award make it easy for them to do so. People like the owners of groups like Chemist Warehouse are paying pharmacists to work in their pharmacies for salaries that don’t value them as health professionals. If this situation does not change patient care will suffer as pharmacists will seek to leave the profession in droves. There are opportunities to change the situation. For the first time in many years the Fair Work Commission (FWC) is overseeing a full review of the Pharmacy Industry Agreement.

PPA and our members have been doing all we can to see that the Award sets a fair basis of remuneration and conditions for employed pharmacists. The leaders of the Pharmacy Owners’ Guild have not helped the situation by joining an attack on pharmacists’ penalty rates. PPA believe if the Guild got its way, it would further devalue the profession by cutting pharmacists’ take home pay. PPA will be joining other employee groups to defend existing penalty rates payable to pharmacists on public holidays and Sundays.

In May, the Federal Government committed $1.26 billion for evidence-based, patient-focused pharmacy programs, such as medication reviews, and the overall review of pharmacy. The lift in funding and review comes on the back of PPA’s calls for community pharmacy reform.

Get involved by:

• Joining PPA if you’re not already a member;• Asking you colleagues to join PPA; and• Liking PPA on Facebook

www.professionalpharmacists.com.au

L-R: David Smith, PA ACT Director, Gai Brodtmann MP for Canberra, PPA members Thanh and Adrian

www.professionalpharmacists.com.au

9

The highlight of the morning (apart from the spectacular view) was the Treasurer of Victoria’s keynote address, which stressed the importance of the engineering profession to the state of Victoria, and to the Victorian State Government. The Treasurer, the Hon. Tim Pallas MP, outlined the Government’s significant infrastructure program, acknowledging the critical role engineers will play.

Engineers are critical, he said, to delivering real value to the state by ensuring the government is an informed purchaser, with engineers providing professional advice with rigour and discipline. In the process the Treasurer wanted to ‘lift the status of engineers’ and welcomed Professionals Australia’s RPEng scheme. Importantly the Treasurer reconfirmed the Governments commitments to a Chief Engineer, Infrastructure Victoria, Project Victoria and registration of engineers.

Treasurer launches RPEng in VictoriaOn the brisk Tuesday morning following the Queen’s Birthday long weekend, more than 100 engineers braved the cold to witness the formal launch of Registered Professional Engineer (RPEng) in Victoria.

The Treasurer also made a commitment to those in the room that Professionals Australia remains the key industry advisory body in the establishment of engineer registration in this state. In addition to the Treasurer, attendees also heard from the Victorian State Director, Sharelle Herrington, and Professionals Australia CEO, Mr Chris Walton.

Get Registered. Get Respect.

www.RPEng.org.au

RPEng

10Gallery

11

Why is this important?

Employees have certain duties regarding how they use confidential information. These duties may continue after you end your employment with the employer. If you breach your duty by disclosing confidential information without your former employer’s consent, you may be required to pay compensation for any loss your former employer has incurred, or forced to account for any profits you have made. Your former employer may also obtain an injunction to stop you from breaching your duty.

It is important to understand the limits of what your former employer can require of you with respect to confidential information, which often includes commercially valuable knowledge, so that you are not improperly restricted from performing your duties in future roles with other employers.

Can I use it?

Whether you can use information that you have acquired through your former employment depends on the answers to the following questions:

1. What type of information is it?2. Is there a restraint clause in your employment contract that

restricts how you can use the information after you haveended employment?

What type of information is it?

Regardless of whether your contract says so, the law imposes a duty of confidentiality on an ex-employee not to make use of his/her former employer’s “trade secrets”. Trade secrets can include customer lists, information relating to the prices at which certain products are bought and sold, and information relating to the business’ costs, profits and losses. In considering whether information is classed as a trade secret, a court will look at a range of factors including the extent to which the information is known outside the business, and the measures that the former employer has taken

to control the circulation of the information. In the course of your former employment, you may also have acquired information that is secret, but is inseparable from “know-how”. “Know-how” refers to the knowledge, skills and experience that you will continually build up during your working life. One possible example of “know-how” is the technical knowledge that an IT developer may acquire while working on his/her employer’s software project. Generally, without more, the courts will be reluctant to restrain you from using this type of information when it is difficult to isolate from everything else that you know. Additionally, information that is secret but trivial will not be protected.

Is there a restraint clause in your employment contract that restricts how you can use the information after you have ended employment?

Nonetheless, a restraint clause in your contract may also operate to restrict how you can use information after your employment ends. Such clauses can expressly restrain you from using secret information that is classified as “know-how”. In this case, as long as the restraint is “reasonable” at the time of the agreement, a court will enforce it. In order to be reasonable, the scope of the restraint must be no wider than reasonably necessary to protect the employer’s legitimate interests, in light of factors including how long the restraint operates and what types of information are covered. A restraint clause is not meant to prevent you from working altogether, and you should consider whether it is likely your former employer may suffer any actual loss or damage as the result of your use of the information after your employment ends.

Confidential information

Confidential information

If you have any concerns about using informa-tion that you acquired during your former em-ployment, please contact workplace advice and support on 1300 273 762

What are my duties regarding how I treat confidential information after my employment ends?

12

In this edition of Professional Edge, Professionals Australia publishes its three latest INFORMERS:• Manufacturing• Road and Rail• Construction

Each INFORMER provides an insight into the trends and factors impacting the industry and its employment outlook.

For more information, please click here or continue reading to the end of this edition.

The INFORMERS are published at the end of the magazine.

13

The golden handshake

Recent comments by Treasury about the way in which reality television renovation shows have created housing price bubbles illustrate the ways in which reality TV has the potential to alter our perceptions.

Every homeowner is now expected to have the skills to knock up an ensuite over the weekend. The humble home cook now has to create a food journey that fits a flavour narrative. And, thanks to shows like The Apprentice, employees are to consistently perform at their peak or risk being told “you’re fired”. But in life the reality is different. Employees do not always perform at their peak. The reasons for this can be many and complex but the solution always starts from the same place – good management. Good management requires the one ingredient that is always missing in reality TV: time. Time to isolate the issue, time to consult with staff, time to reallocate resources, time to retrain and reskill, time to create and generate more work for staff. Unfortunately, time is not always in great supply and employers are sometimes tempted to take the shortcut of offering to “pay out” employees to end the employment relationship. In this article we will look at your rights as an employee when you are offered a “Golden Handshake”.

What is a “Golden Handshake”?

Sometimes it may be the best offer you have heard – work has been getting harder to manage, the boss is looking over your shoulder constantly, you’ve started thinking that you’d like to be rid of the pressure and look for another job. Just as you’re contemplating your options your boss suggests to you that if you decided to leave you will be paid one month salary on top of your entitlements to annual leave and any accumulated long service leave.

While this negotiated outcome is not illegal, it may offend certain laws in relation to unfair dismissal, redundancy and some contractual entitlements.

Unfair dismissal

The Fair Work Act 2009 (“the Act”) tries to walk a fine line between the rights of employers to hire and fire staff based on the needs of their business and the right of employees to not have their employment terminated in circumstances that are harsh, unjust or unreasonable. If an employer is proposing a Golden Handshake because an employee’s performance has not been up to standard, the unfair dismissal laws require that the employer must provide you a warning in relation to your performance.

In practice, the employer must specifically outline the areas of concern and give you a reasonable opportunity to address those concerns by providing you with time, training and any necessary resources (usually as part of a formal performance improvement plan). What constitutes a “reasonable” time to allow an employee to improve their performance will change depending on the type of work performed, but would generally require a period greater than one month. If an employer is proposing a Golden Handshake because of an employee’s misconduct, then the employee needs to be notified of that reason and provided an opportunity to respond. The employer bears the onus of proving that the behaviour occurred and that it constitutes misconduct.

In most cases the employer will need to dedicate resources to investigating the matter such as engaging third party workplace investigators. It may be tempting to an employer to have certainty of the outcome by asking the employee to accept a payment in exchange for the employee signing a deed that prevents them from bringing an unfair dismissal claim against the employer. There is nothing unlawful in this, provided no duress is applied and the employee is not misled about their rights or options.

Redundancy

Sometimes the pace of change in an industry means that a job that was once essential is no longer required, either due to technological advancement, changing business needs or outsourcing. In these circumstances, where the employer has made a decision that the job being done by the employee is no longer to be done by that employee or any other employee, then the employer owes a duty to the employee in redundancy.

Good management requires one thing that is always missing from reality TV: Time. Both employees and managers need to understand the pros and cons of the Golden Handshake – the way out when time runs out. Understanding these entitlements, many might find it’s not all that it’s cracked up to be.

The golden handshake

14

The duties in redundancy include the duty to consult, the duty to consider alternative positions and the duty to pay a redundancy payment if the employee cannot be relocated. The amount of payment in redundancy depends on what is set out in either the employee’s contract or collective agreement, but the Act sets out the following minimums:

* There is a reduction in redundancy pay from 16 weeks to 12 weeks for employees with at least 10 years continuous service. This is consistent with the 2004 Redundancy Case decision made by the Australian Industrial Relations Commission.

The above table sets out the minimum payments – these may be higher depending on the applicable industrial instrument. Redundancy payments also attract far more beneficial tax treatment than Golden Handshakes. The duties imposed on employers in redundancy, such as consultation and relocation, can appear onerous to some employers who prefer the certainty of outcome that Golden Handshakes provide.

However, employees may be better off in the long run by retraining and transitioning to a new role with their employer rather than facing an uncertain labour market, and employees have a right to be considered for alternative employment. Also, while the amount being offered in a Golden Handshake may seem attractive, if it is not properly characterized as a redundancy it would lose any beneficial tax treatment and be taxed at the higher Employee Termination Payment rate of 31.5%.

Employee’s period of continuous service with the employer on

termination

Redundancy unpaid

At least 1 year but less than 2 years 4 weeks

At least 2 years but less than 3 years 6 weeks







At least 9 yearsbut less than 10 years 16 weeks

At least 10 years* 12 weeks*

Contractual and other entitlements

An employee who has had their employment contract terminated (either unilaterally or by mutual agreement) has a number of possible outstanding payments legally owing to them by their employer. These entitlements may be provided for in the Act, an applicable modern award, a collective agreement or by way of contractual obligations.

Outstanding remuneration:

An employer must pay an employee any wages outstanding to legally terminate the employment contract. This is most commonly made express by a term of the contract, but is also implied into all contracts at common law.[1] One caveat on that common law presumption is that an employee has no implied right for payment for part performance. This means that an employee who knows of their pending termination and decides not to perform their full range of tasks as required by their contract, may lose a claim to payment for any ‘part’ work they have actually done (Rodgers J per Csomore).

Payment in lieu of notice if applicable:

Under s117 of the Act, an employee may be entitled to be ‘put on notice’ for a period prior to dismissal. If an employee is on a fixed term contract, notice is not a requirement (s123)(1)), the contract must be fully performed and can only be terminated early if it is an express right of contract (unless a grounds for summary dismissal exists). However, if the contract is indefinite, the Act imposes an obligation of a notice period. For this period, the length of which depends on the duration of continuous employment, the employee must work out a certain period for which they are to be paid. This period can also be paid out ‘in lieu of’ the employee actually working during that period and is calculated at the full rate of pay had the employee actually worked.

Accrued annual leave:

Annual leave is a statutory entitlement under the Act which accrues over the period of employment. Any accrued and unpaid leave must be paid out on termination as if the employee had taken out leave pursuant to s90(2) of the Act. If stipulated by a relevant modern award, annual leave loading will be applied to that accrued figure.[2]

15

Long service leave:

Accrued long service leave may also be payable upon termination of employment. The quantum and eligibility to long service leave will depend on any relevant modern award applying or, if none applies, the State laws which apply.

Benefits stipulated under contract:

Irrespective of any statutory right to termination payments, a contract itself can provide its own set of entitlements to be paid. Some common examples include commissions, bonuses, ex-gratia termination payments and payouts of sick leave or personal leave.

Balance of superannuation contributions:

It is also incumbent on an employer to ensure that all employees’ super contributions are up to the date effective from the date of dismissal. This may have to account for any notice period applicable, depending on whether the notice period was worked out or if the contract provided for superannuation to be paid on ex-gratia payments.

And a note on Fixed Term contracts:

Fixed term contracts are treated slightly differently. This is because there is an enforceable contractual date of termination, the date upon which final payments are to be made. It is not uncommon for this termination date to be based on a stipulated retirement date[3] or a date contingent upon the completion of a specified task or project. Practically speaking, termination by an employer prior to this date will mean that a breach of contract has occurred which will render the employer liable to either remedy the breach or pay compensation. This may include any due payments, required by the FWA or contract, up until the original termination date of the contract. For example in Stoelwinder v Southern Health ,[4] a fixed-term employment contract provided that ‘‘all unpaid entitlements” were to be paid on the termination date. Even though the Act does not require an employer to pay out accumulated sick leave on termination of employment, the court interpreted the contractual term in this case to expressly include a payout of sick leave; an amount that was calculated to be $500,000.

Conclusion

There are a range of overlapping rights and obligations that attach to employment relationships. The consequence is that an employer who ends an employment contract by offering what appears to be a generous Golden Handshake to the employee may in fact be offering the employee less than they may otherwise be entitled to. For this reason it is always advisable to have any offers from your employer checked over by your union.

Contact us

To contact the Professionals Australia Workplace Advisory Services, email [email protected] or phone 1300 273 762.

About the Author

Joseph Kelly has had extensive experience in commercial litigation and workplace law, having advised employers and employees on all issues relating to industrial relations and employment law. Joseph has advised industry bodies, unions, employers and government and continues to run training and information seminars for legal practitioners. Joseph is currently the Principal of Kelly Workplace Lawyers. [www.kwlawyers.com.au]

Disclaimer

This advice and comments are provided as general information and should not be construed as legal advice. Separate legal advice relating to the interpretation and implication of this article for your individual circumstances should be obtained.

• [1] Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA25.

• [2] Centennial Northern Mining Services Pty Ltd v CFMEU[2015] FCA 136.

• [3] Qantas Airways Limited v Christie (1998) 193 CLR 280.• [4] Stoelwinder v Southern Health [2001] FCA 115.

16

This integrates Chifley Business School with Torrens University Australia, securing the university a strategic industry partnership with over 10,000 alumni, ensuring the delivery of industry-aligned business programs geared towards the professional leaders of tomorrow.

For over two decades Chifley Business School has provided management development programs throughout Australia and overseas, including Master of Business Administration (MBA) and related postgraduate courses. Originally founded in 1989 as the education arm of Professionals Australia, CBS has regularly been ranked one of the Top 20 MBA Providers and Top 10 Value for Money MBA providers in Australia .

Vice Chancellor of Torrens University, Professor Justin Beilby, said: “Chifley Business School has long been committed to the delivery of flexible, industry-aligned programs, designed by industry for industry. Chifley Business School at Torrens University Australia students will benefit from the combined strength, innovative approach and resources of both institutions, as well as having the opportunity to leverage what is a formidable powerhouse of joint industry and professional connections spanning 29 countries across the globe.”

Mr Simon Finn, CEO of Chifley Business School said: “This collaboration between Chifley Business School and Torrens University will result in the delivery of new and specialised market-leading

programs in high demand industries, including those from our founding organisation, Professionals Australia, which has 25,000+ members and wider network of 750,000+ professional association members.”

Ms Linda Brown, CEO of Laureate Australia and President of Torrens University Australia said: “We are incredibly excited about this new venture, which reflects Torrens University’s strategy to partner with market leading institutions and businesses to co-create a future focussed university where graduate outcomes deliver ethical global leadership and innovative economies.”

The first round of courses to be delivered via Chifley Business School at Torrens University Australia will commence in September 2015 and will include a Masters of Business Administration, Masters of Global Project Management and nested courses including graduate certificates in Management and Strategy Leadership.

As a result of its new arrangement with Chifley, Torrens is currently offering a 20% full tuition waiver on post-graduate courses exclusively for Professionals Australia members. Visit https://chifley.edu.au/postgraduate-programs/entry-requirements for more information.

Visit: www.tua.edu.au

Education update

Torrens UniversityTorrens University Australia, Australia’s newest university and part of the Laureate International Universities global network has acquired the internationally recognised Chifley Business School.

17

Belinda, a lawyer with the Associations Workplace Advice & Support Team explains how they work.

There is a vast amount of case law and legal precedent regarding which entity is the employer of the LHWs in a labour hire arrangement. At times, the LHWs may have an employment agreement with the labour hire company. On other occasions, they may be Independent Contractors (or Sub-contractors) of the labour hire company. Ordinarily, there is no direct contract with the Client of the labour hire company (sometimes referred to as the “host organisation”). In general, the legal precedent shows that the Courts do not consider LHWs to be employees of the host organisation. Part of the reason for this is because there needs to be a direct contractual relationship between two parties (albeit this does not have to be a written agreement) for there to be an employment relationship.

As such, the prima facie position would appear to be that a LHW is not an employee of the host organisation. The LHWs may be employees of the labour hire company. However, the LHWs could also be independent contractors, and therefore there may not be any employer/employee relationship. Independent contractors do not receive the same entitlements as employees would.

In some cases, it has been determined that LHWs engaged by labour hire companies are employees of the host organisation, although these cases are not common. One example of where it has been determined that the host organisation was the employer of the LHW was where the person had applied for a job with the host organisation and been employed directly by the host organisation. After commencing work with the host organisation, the person signed documentation which purported to make her a casual employee of a labour hire company. As the host organisation had directly employed her, rather than the person being referred via the labour hire company, this was indicative of an employer/employee relationship between the person and the host organisation. Furthermore, it was found that the host organisation exercised both practical and legal control over the person.

When considering which entity could be the employer of a LHW, it is not just about considering who exercised day-to-day control over the LHW, the consideration is which entity exercised “ultimate” control, or “legal” control. Other aspects to consider include

Labour hire arrangementsI have been offered a position with a Labour Hire Agency – What does this mean for me? - Will I be an employee or independent contractor? If I am an employee who is my employer? Labour hire arrangements are on the increase in Australia. They are often attractive to employers as a way to manage peak periods etc. However the arrangements themselves can sometimes be confusing.

which entity had the legal obligation to pay the entitlements of the LHW; which entity had the right to dismiss the LHW; and whether there was any intention to create a contractual relationship between the host organisation and the LHW.

If ultimate control is exercised by the labour hire company; if the obligations to pay the LHW fall with the labour hire company; if only the labour hire company has the right to dismiss the LHW; and if there was no intention to create a contractual relationship between the LHW and the host organisation, then it would appear that the labour hire company is more likely to be the employer of the LHW. Once again, it could be that there is an Independent Contractor relationship, and not an employer/employee relationship.

Management

Every situation needs to be considered in light of its own facts. If you are engaged through a labour hire company and require assistance or advice, please contact Workplace Advice and Support of 1300 273 762.

Belinda is a member of the Association’s Workplace Advice & Support Team (WAS) and is based at the national office in Melbourne. She has been with the Association since July 2013 and since that time has dealt with a wide range of employment law matters. Belinda has represented both individual members and groups of members. She is a qualified lawyer and has been admitted to practice.

WAS is a much valued member service

and is largely staffed by lawyers. Members from across Australia can make contact regarding individual employment matters and receive advice, support and if needed representation in negotiations with their employer or before industrial tribunals and courts.

18

Women in IT scholarship

Jennifer graduated with an IT degree from the University of Wollongong in 2009 and has a Masters in International Business, an MBA from UOW and Ecole de Management Strasbourg France. She currently holds a CISA (Certified Information System Auditor) from ISACA. Her PhD will be on 3D Printing Risk and Control in the public sphere.

Jennifer is intending to put the $500 towards undertaking the Certificate IV in Training and Assessment. On how she expects the training to contribute to her career progression she said:

“Two months ago I moved to a regional area from Sydney. Doing a Certificate IV will allow me to use my current IT skills to teach others at the local TAFE and University campus. The opportunity to undertake this training means I can continue to work in IT rather than

Member Profile

Jennifer Wonson – a NSW-based IT Professional - has been named recipient of the inaugural Professionals Australia Women in IT scholarship.

having to consider leaving the industry because of my move away from Sydney so I very much value Professionals Australia’s assistance.”

Women are seriously underrepresented in the IT sector – women’s participation is under 10 per cent for most specialised ICT professional occupations and attrition of women from the profession is high. Professionals Australia believes that Continuing Professional Development (CPD) can play an important role in helping address the retention of women in the profession and in turn the underrepresentation of women in IT.

Miles CRC Program review reports back

The Minister for Industry and Science Ian Macfarlane has released the report of the Miles Review of the Cooperative Research Centres (CRC) Program.

The Review made a total of 18 recommendations with all the recommendations accepted by the Australian Government. Release of the report follows a $26.8 million cut to CRC program over the next 4 years announced in the 2015 Budget, on the back of last year’s cut of $80 million and suspension of a funding round midway through.

The Miles Review found that the program was valuable and effective and should continue with a more targeted focus on delivering outcomes for industry through industry-led research. The Review says that the CRC Program could “be the engine of innovative research to support the work of the Growth Centres and develop areas identified by industry and Growth Centres, commercialise them, and take them to domestic and international markets.”

The Review did not support the recommendation of the 2014 National Commission of Audit to abolish the CRC Program. Taking this course of action would, they said, “risk even lower levels of industry-led collaborative research in Australia than is currently the case.”

For more on the review, visit :

• http://www.professionalsaustralia.org.au/scientists/blog/miles-review-recommends-the-crc-program-take-a-central-role-in-industry-led-research/

• http://www.professionalsaustralia.org.au/scientists/wp-content/uploads/sites/36/2014/04/Innovation-and-competitiveness-through-collaboration.pdf

http://www.professionalsaustralia.org.au/scientists/blog/miles-review-recommends-the-crc-program-take-a-central-role-in-industry-led-research/



http://www.professionalsaustralia.org.au/scientists/wp-content/uploads/sites/36/2014/04/Innovation-and-competitiveness-through-collaboration.pdf



19

Professionals working in later life: Personal experiences and changing contexts

Alison conducted interviews during 2014 with 34 engineers, most of whom are members of Professionals Australia. The study extended the initial age range of 55 to 70 years to include engineers older than 70 who are continuing to work. Of the 34 participants, 12 were self-employed and 22 worked (or had recently worked) in salaried employment. There was a strong representation from regional/rural areas.

Swinburne University PhD student, Alison Herron, is well underway researching professional engineers’ experience of late working life in the current economic and social climate. She recently delivered a report to CEO Chris Walton on the progress of the project to date and the interim findings. Professionals Australia publicised the project nationally to our members to assist Alison recruit engineers to participate in interviews.

Participants had the opportunity to engage in a flexible conversation to explore the topic of late working life according to what they thought was most important to talk about. The 34 professional engineers who participated in this study used the space provided by the interview to make sense of:

• their working lives and what comes next: personal experiences• the changes to their wider professional world: changing contexts

Figure: Age of participants

0

2

4

6

8

10

12self-employed Salaried

55-59 60-64 65-69

Age Range (in years)

70-74 75-79

No.

of e

ngin

eers

9

44 4

11

2

2

43

local Govt13%

Govt-owned corporation

18%

Private -consultancy company

23% Federal/state public service

23%

Private - other23%

Figure: Employment sector of salaried employees

Member Profile

20

Thanks to the willingness of these participants to contribute their thoughtful responses, the project has generated richly interesting qualitative data. After a lengthy process of transcribing the interviews and writing syntheses of the interviews for feedback from the participants, Alison moved to the next stage of data analysis which involved close reading of all the transcripts and syntheses. This level of interpretation of the data brings to light the following set of interim findings:

1. Work still constitutes a very important part of life for these engineers in late career. For most, their orientation is towards continuation of their careers rather than consideration of retirement. 2. Intentions and decisions to extend careers are motivated by meaningful work and recognition from others that their contribution is valued.

Work can assume a different meaning in later career. Participants value opportunities in their roles to:

• make a positive difference• pass on knowledge• integrate their lifetime’s knowledge and experience • enjoy what they are doing• be challenged by interesting work• work in flexible arrangements

Financial security is important but for most participants satisfaction and enjoyment provide the key motivations to continue working.

Self-employment can be a fulfilling and enjoyable work arrangement in late career but its success for the individual depends on many factors.

• Careers as self-employed engineers tend to evolve with learning along the way rather than be clearly planned in advance.• Being older is usually perceived as an asset in self employment because it carries experience.3. Opportunities to extend careers as engineers can be constrained by uncertainty from a complex mix of external factors, particularly the ongoing availability of work and ageist attitudes in organisations.

• Age-based discrimination within organisations and also in recruitment processes was identified as a significant problem for many older engineers.

• Retrenchment has been a common experience of these engineers during their long careers. Some faced redundancy at the time of this study, others anticipated that the timing of their exit would be determined by employers via redundancy.

4. The boundaries between work and retirement in the current era are blurred and can be crossed in both directions – multiple times.

Retirement is a social construct interpreted in many ways by these engineers, including exit from their full-time organisational position to non-standard work arrangements, exit from all paid work, exit from the profession, a new stage of life to enjoy other interests, or fear of the spectre of boredom.

Few have engaged in detailed planning for their future beyond financial advice.

5. Most participants expressed a desire to pass on their accumulated knowledge and experience but currently the necessary structures are limited. Some recommended that Professionals Australia and Engineers Australia could become more active in developing structures for older engineers who are still working or have fully retired to engage in mentoring younger members of the profession.

“I reckon there’s a fair bit of knowledge and understanding that I’ve got, and I didn’t just want to walk away and leave that. To me that’s sacrilege. I think it’s a complete waste of people’s knowledge and understanding to not tap into that and try and learn from it.”

On completion of her thesis Alison will provide a final report to Professionals Australia on the findings. This will give Professionals Australia a much better understanding of the realities of late career for professional engineers and the influences on their continuing engagement in the workforce. With forty per cent of our membership aged over 50, this knowledge will help us respond more effectively to our members in this demographic.

21

Professionals Australia regularly run free seminars for members in all capital cities across Australia. Our seminars keep you up to date and help you get ahead financially. Regular topics include negotiation skills, career progression, financial planning, taxation and investment and finding a rewarding job. Our seminars allow you to meet and network with other like-minded professionals. See below for a list of upcoming events.

VICTORIAMelbourne – Wednesday 9 Sept Smart strategies to manage debt

AUSTRALIAN CAPITAL TERRITORYCanberra – Thursday 20 Aug Redundancy - Where to next - Job searching

SOUTH AUSTRALIAAdelaide - Wednesday 19 Aug Estate Planning

Adelaide - Wednesday 16 Sept Smart strategies to manage debt

QUEENSLANDBrisbane - Tuesday 18 Aug Redundancy - Where to next - Job searching

Brisbane - Wednesday 9 Sept Smart strategies to manage debt

WESTERN AUSTRALIAPerth - Tuesday 13 Aug Redundancy - Where to next - Job searching

Perth - Wednesday 9 Sept Smart strategies to manage debt

NEW SOUTH WALESSydney (Parramatta) Tuesday 13 Aug Estate Planning

Sydney (Newcastle) - Wednesday 2 Sept (Financial topic TBC )

Sydney - Wednesday 9 Sept Smart strategies to manage debt

Sydney (Newcastle) Wednesday 21 Oct Financial topic TBC

Respect, recognition and reward

ProfessionalsAustralia

EVENTS & SEMINARS

EVENT DETAILS:

22

23

Professionals AustraliaSTREET ADDRESS 163 Eastern Rd, South Melbourne Victoria 3205, Australia

POSTAL ADDRESS GPO Box 1272, Melbourne Victoria 3001, Australia

TELEPHONE 1300 273 762

FAX +61 3 9695 8902

EMAIL [email protected]

WEB www.professionalsaustralia.org.au

Issue 06 August 2015

1

PREPARED FOR MEMBERS



CONSTRUCTION INFORMER

WHAT’S INSIDE:

• The big issues• The long-term outlook• The opportunities

2

Summary

The Australian economy remains in a transition phase as the mining boom continues to slow. As the reliance on mining declines, it will be up to other industries to drive growth. One of the bright spots in the economy is the recent performance of the construction sector, particularly residential construction.

The construction sector is of major importance to the Australian economy. During 2014–15, the construction sector is expected to employ 1,060,000 people, which represents 9 per cent of total employment across Australia. Over the same period, total income earned by the construction sector is forecast to total $341.2 billion. According to the latest ABS figures, the value added by the construction sector accounts for 8 per cent of GDP.

The construction informer

Indicators Latest figures % change since previous period

% change since previous year

Building construction

Approvals (total) 19,333 (March 2015) 18 18.2

Private sector houses 9,489 (March 2015) 0.2 -

Excluding houses 9,605 (March 2015) 3.6 44.4

Work done (total value) $22,328m (Q4 2014) -0.2 4.1

Residential $13,752 (Q4 2014) 7.2 12.4

Non-residential $8,584 m (Q4 2014) -1.4 -2.5

Engineering construction

Work done $27,854 (Q4 2014) -0.6 -12.4

The economy

The global financial crisis changed the way Australians managed their finances. Many households sought to minimise debt levels and nearly doubled their savings rate. The high savings ratio has persisted since 2008, remaining around 10 per cent. While household savings are strong, the Reserve Bank now faces the task of encouraging spending in an effort to boost growth. Efforts to boost spending are likely to aid the construction sector.

Table 1: recent performance measures

Table 2: current economic indicators

Note: All figures are ABS ‘trend’ figures

Note: figures current as last published

Indicator Latest figures (%) Date released 12 months ago (%)

Economic growth 2.5 Dec-14 2.8

Unemployment 6.1 Apr-15 5.9

Participation rate 64.8 Apr-15 64.8

Inflation (CPI) 1.3 Mar-15 2.9

Wage price index 2.3 Mar-15 2.6

Household savings ratio 9.1 Dec-14 9.9

RBA cash rate 2.00 May-15 2.5

Informer - Construction

3

The big issues

These are the big issues facing the Australian economy:

1. Global growth. Global growth of 3.5 per cent is expected in 2015, while 3.17 per cent growth is forecast for 2016. A rebounding US economy has been aided by low world oil prices. While some lingering instability remains in Europe, the region has also displayed some positive signs. Asia continues to outperform, despite slowing slightly. A shift in Chinese growth to more reasonable rates has occurred, as they transition to a consumer-driven economy.

2. The transition. Over the past year, the RBA reports that commodity prices have fallen by 20.5 per cent, restraining the performance of the mining sector. Conversely, the AUD has depreciated against the USD, by approximately 15 per cent over the past 12 months, supporting trade-exposed industries. The dropping of the cash rate to 2 per cent in May has helped support this devaluation, while also promoting residential housing and construction.

The outlook

The Australian Construction Industry Forum (ACIF) is predicting that total spending on construction will remain relatively stable for 2014-15, dropping by only $5 billion to $228 billion. However, where money is spent in the sector is likely to change. Demand from foreign investors and a strong domestic market is forecast to drive growth in residential construction’s share of the sector to $90 billion in 2017-18, from the current $75 billion.

Engineering construction is forecast to decline from a peak of $128 billion to $92.5 billion in 2017-18, reflecting the slowing investment in mining and allied sectors. However, the rest of the economy remains strong.

The long-term outlook

The Australian construction sector will face ongoing challenges over the coming years. Those operators that invest in new and emerging technologies and keep a keen eye on demographic trends will be best positioned to prosper.

Residential

• Falling affordability. Housing scarcity issues and ongoing property speculation are making houses less affordable in major cities. As the National Housing Supply Council reports, ‘While detached houses will dominate the stock of housing for many years to come, smaller and higher density dwellings are likely to form the majority of additions to housing supply in major cities and towns’. This trend is particularly pronounced in the apartment markets in our two largest cities of Sydney and Melbourne. While interest rate cuts have reduced the cost of debt, they have also exacerbated housing price growth. With State governments reliant on the private sector to boost supply, the challenge for industry will increasingly be to change consumer behaviour an increase the uptake of affordable small-medium size dwellings.• The Baby Boomers are retiring. With the first Baby Boomers reaching 65 in 2011, older households will become ‘a potent force’ in the Australian housing market. Decisions about house size, design and location will affect demand, supply and affordability over the coming years.

• Investment and speculation. Residential property is taking on more characteristics of an investment vehicle. Negative gearing, foreign investment and the popularity of SMSFs are supporting price growth and promoting greater activity in the construction sector.

Non-residential

• Infrastructure and capability. Australia’s infrastructure investment is currently shifting away from mining and into productivity driving roads and rail. NSW and Queensland both have large projects in the pipeline, shifting the focus of engineering outputs. However, depleted engineering stocks - through under investment – will challenge their ability to manage this investment. While Victoria has a comprehensive engineering capability policy, NSW does not.

• Environmental efficiency. Energy-efficient offices, factories and other workspaces are becoming increasingly sought-after. New buildings are required to meet energy efficiency standards, while many existing buildings are also being upgraded. High energy costs are driving much of this change, as businesses seek to minimise running costs. Advances in renewable energy and energy storage technology will encourage many commercial establishments to invest in renewables where possible.

4

The opportunities

• Low interest rates. The Reserve Bank cut interest rates to a record low of 2 per cent in May. While the move seeks to stimulate spending across the economy, the most immediate consequence for many households is the lower cost of debt. Low lending costs are likely to encourage many households to borrow to fund the building of new homes or improvements to existing buildings. Interest rates are expected to remain low over the next few years, providing opportunities for residential builders.

• Housing affordability and shortages. Residential construction will continue to provide strong opportunities for growth. Strong competition will encourage builders to push seek cost savings in order to capture larger margins or decrease their prices. Governments have pointed to shortages as a driver of high prices. As a result, strong residential construction activity is expected over the coming years to address these shortages.

• Energy efficiency. The increasing shift towards energy efficiency will require builders to incorporate new elements into building design. Significant opportunities are present for operators that can incorporate these requirements into their designs and cater for the climate conscious consumer.

5

Construction informer

Level 1, 163 Eastern Road SOUTH MELBOURNE VIC 3205 [email protected] 1300 273 762 +61 3 9695 8902


1




ROAD AND RAIL INFORMER

WHAT’S INSIDE:

• Current performance• Funding• Australian Infrastructure Audit

2

The summary

Infrastructure Australia recently released its comprehensive Australian Infrastructure Audit which stressed the importance of ongoing, well-planned investment in roads and rail.

The audit says that “productive, sustainable infrastructure is essential if we are to drive economic growth, increase employment and enhance the quality of life of all Australians.” Major investment in roads and rail will become increasingly important over the coming years as population growth places greater strain on existing networks.

Informer – Road and Rail

Current performance

Spending on roads and rail remained strong through much of the 2000s, with several major projects contributing to an improvement in the nation’s infrastructure stocks. However, declining in infrastructure spending over the past five years has impacted the growth of roads and rail networks.

Informer - Road and Rail

3

Road

Australia relies heavily on its road network for both passenger and freight transport. Major roads investment remains a high priority for Governments across Australia, and is typically well supported by voters.

As a result, investment in roads is strong, with engineering construction work on roads across Australia totalling $16.3 billion in 2013-14 . However, despite the importance of road networks, investment has declined by an annualised 2.1 per cent over the past five years according to the Bureau of Infrastructure, Transport and Regional Economics. Much of this decline was driven by a lull in activity during 2013-14, with the longer-term trend supporting greater investment in roads. The Australian Infrastructure Audit suggests that congestion on roads cost the nation $13.7 billion in 2011. This demonstrates that while the overall sum of road investment is significant, more work needs to be done in order to reduce the drain caused by congestion.

Rail

Investment in rail has fared better over the past five years as Governments sought to improve networks and take the strain off roads.

Engineering construction work done on rail has increased by an annualised 16.8 per cent over the past five years, to total $7.6 billion in 2013-14. Improvements in major capitals and investment in additional rolling-stock have provided a boost for network users, with greater reliability and more services making public transport increasingly attractive for commuters. Rail networks have also benefited from investment in freight lines, driven by the growing popularity of rail-freight and increased congestion on roads. The need for efficient networks to transport bulk-freight - such as mined commodities - has encouraged investment. Private investment in rail has been a major avenue for growth over the past decade, with more projects still to come. These privately funded projects include the $2.2 billion North Galilee Basin Rail Project and the Carmichael Coal Mine and Rail Project, which are both expected to commence over the next five years. While the mining price boom appears to be over, volumes of mined goods are higher than ever. Rail freight is the only efficient mode of transporting these goods to ports for export. As a result, mining continues to provide a major source of investment in rail.

Share of infrastructure spending Infrastructure Engineering and Construction work done

30,000

25,000

20,000

15,000

10,000

5,000

2008-09 2009-10 2010-11 2011-12 2012-13 2013-140

Roads and bridges Railways Total

4

Funding

Governments across the political spectrum generally agree on the importance of infrastructure, and have supported the push for more major projects.

However, major infrastructure decisions have become increasingly political over the past decade. While the future of infrastructure spending looks strong, the challenge for Governments at all levels will be to ensure the needs of the community drive investment in the nation’s road and rail networks.

The increasingly political nature of infrastructure has led to greater scrutiny of the cost of projects. In order to satisfy voters and avoid media criticism, Governments are required to deliver major projects, with clear economic benefits, at as low a cost as possible. The sharing of investment and risk between Government and private parties can significantly reduce the up-front costs, making major investments more palatable for voters. Toll roads are one avenue through which this might occur, with private toll-road operators contributing a portion of the initial investment in exchange for the right to charge tolls once the project is completed. According to IBISWorld, Toll road operators in Australia will earn a combined $2.1 billion in 2014-15 , rising by an annualised 5.6 per cent over the past five years due to increased patronage and the opening of new roads. While tolls remain unpopular among some motorists, many appreciate the benefits provided by private involvement, as in many cases this can be the difference between a major project going ahead or being rejected.

Outlook

The future for roads and rail remains strong, as the community and Governments both recognise the need for greater investment.

Population growth

The population – particularly around major capitals – is forecast to grow, driving greater congestion and higher travel times on roads and rail, especially during peak travel periods. These challenges are likely to promote growth in network investment. Governments at all levels have recognised the need to improve road networks, reduce bottlenecks and take

freight traffic off suburban roads. This has encouraged a number of major projects, with more proposals in the pipeline. IBISWorld forecasts road and bridge construction to increase by an annualised 3.9 per cent over the next five years . Renewed investment in roads will drive growth in engineering construction in the short-term, and will support much-needed productivity gains in the wider economy over the longer-term. While Government spending constraints will pose a challenge for road and rail, Governments need to weigh up the additional cost of investment, against the potentially enormous future cost for the economy if these investments in road and rail are not made.

Superannuation

Superannuation, at its core, is essentially a large-scale investment scheme. According to the Australian Prudential and Regulatory Authority, the total sum of funds in superannuation reached $2 trillion in March 2015 , with approximately 4 per cent of this invested in infrastructure. Infrastructure is an especially appealing investment for superannuation funds in ensuring the stability of returns over a long-term. As the pool of funds in superannuation continues to grow, the amount of money available for infrastructure investment will rise, providing an enormous opportunity for infrastructure development.

Australian Infrastructure Audit

Infrastructure Australia published its Australian Infrastructure Audit in May 2015 . The overriding theme of the Audit was the need for greater investment. The Audit estimated that congestion on roads cost the nation $13.7 billion in 2011. This number is expected to swell to $53.3 billion in 2031. The Audit presents a compelling case for change, making it very clear that a business-as-usual approach to Australia’s roads and rail will not be adequate to maintain quality of life.

Infrastructure Australia’s next step in its push for infrastructure improvements will be the publication of a 15-year plan. The plan aims to place better investment on the agenda for Governments and encourage the development of a pipeline of major projects, free from political intervention. While it remains unclear what kinds of projects will be supported by the plan, it is clear that large-scale new investment in road and rail will be a key feature.

5

Road and rail informer



1




MANUFACTURING INFORMER

WHAT’S INSIDE:

• International trade• Technological Advances• The Budget

Carbon fibre wheels made by Geelong company, Carbon Revolution, to feature on Ford Mustang. (Supplied: Ford)

2

Summary

Manufacturing plays an integral role in driving the Australian economy. The sector is one the nation’s largest employers, responsible for 8.4 per cent of the labour force. However, despite its importance to the economy, Australian manufacturing has struggled to maintain growth over the past decade. Despite losing some ground to foreign manufacturers, the local industry contributes enormously to the health of the Australian economy, and will become more important as Australia’s reliance on mining subsides. The manufacturing sector continues to produce world-class goods, and local manufacturers are renowned abroad for the quality of their products. A focus on quality, combined with rising demand from China’s middle class are likely to provide opportunities for growth over the coming years.

Current performance

Demand for Australian manufacturing remains high, with local producers manufacturing a wide array of high-quality goods. Australian manufacturers maintain significant advantages in training and skills when compared with competitors throughout Asia. Despite these advantages, profitability within the industry has declined markedly over the past five years. Profit margins declined by an annualised 7.1 per cent over the five years through 2012-13, despite relatively steady revenue. As a result, the sector’s contribution to Australia’s total value added has declined slightly to $98 billion or 9.8 per cent of GDP in 2012-13.

Informer – Manufacturing

The economy

The difficult economic environment since the global financial crisis drove many businesses to cut spending. However, as economic growth strengthens, businesses are likely to focus on value-for-money, instead of low cost. At present, the economy appears to be stuttering in its recovery, with several major economic indicators – such as GDP growth and unemployment – looking slightly worse than 12 months ago. In the face of this ongoing uncertainty, the RBA has lowered interest rates to historic lows, significantly lowering the cost of capital and encouraging businesses and individuals alike to invest.

International trade

For much of the past decade, the conversation surrounding international trade has focused on the high local currency, and the competitive advantage that this has given to imported products. However, since 2013 the Australian dollar has plummeted, providing a shot in the arm for local exporters. Successive interest rate cuts and improving economic data out of the US have aided the fall, pushing the dollar lower and making locally produced products more competitive. With interest rates expected to stay low for the foreseeable future, local manufacturers will continue to benefit from a lower exchange rate.

0

1

2

3

4

5

6

7

8

Economic Growth

Unemployment Wage Price Index

2.5%2.8%

6.1%

1.3%

2.6%2.9%

2.3%

5.9%

Released:Dec 2014

Released:April 2015

Released:March 2015

Released:March 2015

12 months ago

Participation Rate0

10

20

30

40

50

60

70

64.8% 64.8%

12 months ago

Released:April 2015

ABS Cat. 1345.0, ABS Cat. 6401.0, http://www.rba.gov.au/statistics/cash-rate/

Economic Indicators

Informer

3

Competitive edge

The Australian manufacturing sector has again led the way in research and development, accounting for 24.0 per cent of total R&D expenditure. According to the latest ABS data , Manufacturers spent a total of $4.5 billion on research and development in 2011-12. Research and development is particularly labour intensive, and requires highly trained staff. The importance of these activities to the sector underlines the integral role that quality staff play in the overall success of the sector. This reliance on skilled labour is only going to increase as manufacturers seek to maintain their advantage over cheap imported products.

Employment

Employment in the manufacturing sector has trended downwards over past decade. Manufacturers shed a combined 10,943 jobs in 2013-14. A lack of ongoing Government support for struggling industries - such as automotive manufacturing – has driven substantial staff cuts at some major firms. Despite declining, the industry employed a sizeable 949,700 employees in 2013-14. The sector benefited from employment growth across food and beverage manufacturing, while a rising housing sector also supported some growth from industries producing construction inputs.

The outlook

The outlook for the manufacturing sector remains challenging. However, there are some opportunities for growth. The industry has invested heavily in research and development, and will see much of this investment come to fruition. Free Trade

The Australian Government has confirmed free trade agreements with Japan, South Korea, and China over the past year. The agreements, while promoting international trade, have been met with mixed responses, with many manufacturers fearing the removal of tariffs will cause a rise in imports. There are also some concerns about the use of foreign workers distorting the local labour market and costing Australian jobs. However, manufacturers targeting lucrative export markets are expected to benefit, as their products become more accessible and more affordable abroad. The growing middle class in China is expected to drive growth in demand Australian products. According to research by McKinsey in 2012, China’s upper middle class accounted for just 14 per cent of households, while just 3 per cent of households could be considered affluent. By 2022, 54 per cent of Chinese households will fall into the upper middle class, with the percentage of affluent households having tripled to 9 per cent. This represents the largest opportunity for growth in the local industry over the coming years.

Technological Advances

Australian manufacturing will move further up the value chain over the coming years, as operators leverage their strengths. A 2014 report by the Australian Workforce and Productivity Agency points to competitive advantages in “precision, high value-added products including aerospace components, machine tools, medical devices, electronics, scientific instruments, advanced materials and pharmaceuticals”. These areas provide significant opportunities for growth over the coming years, as many low-cost foreign producers simply cannot compete with the quality of local manufacturers.A recent report by the NSW Chamber of Business suggests that a shift away from high volumes towards customised products provides an area of competitive advantage for local manufacturers against cheaper, high-volume imports. Most consumers understand the additional value gained through customised products, and most are willing to pay a premium for this level of specialisation. The profitability, efficiency and productivity of factories will be driven by the skills of highly-trained staff, requiring manufacturers to employ, train and retain a high-quality workforce. An eventual shift towards mass customisation is likely to deliver the most value, as the model merges the benefits of specialised products with larger economies of scale.

The Budget

The 2014-15 Federal Budget announced a range of assistance measures for small businesses. Small businesses with revenue under $2 million will receive a cut in the corporate tax rate, to 28.5 per cent, down from 30 per cent. The Federal Budget also encourages small businesses to invest in the future, allowing them to immediately claim tax deductions on individual asset purchases under $20,000. If the measures are successful, greater investment in the short term is likely to drive improved growth among small businesses in the longer term.

International trade

ABS Cat. 5368.0ABS Cat. 8104.0http://www.mckinsey.com/insights/consumer_and_retail/mapping_chinas_middle_class http://www.awpa.gov.au/our-work/sector-specific-skill-needs/Manufacturing_workforce_study/Pages/default.aspx https://www.nswbusinesschamber.com.au/NSWBC/media/Misc/Policy%20Documents/NBC-515_Manufacturing_Futures_Paper.pdf

International trade

2012-13 ($ billion) 2013-14 ($ billion) 1 Year Change

Imports 205.8 219.3 6.6%

Exports 86.8 90.4 4.1%

4

Manufacturing Informer

