Labour mobility OK, but government not helping: Productivity Commission

Australia’s workforce is more mobile than others, but some sectors like construction are still struggling to fill jobs. AAP/Julian Smith

Australians are more mobile than workforces in other countries, according to the latest Productivity Commission draft research report on labour mobility.

But continued unevenness means acute labour shortages will continue in the regions while western Sydney and other areas face higher unemployment. Difficulties in filling some jobs also means a greater reliance on temporary skilled migrants than ever before.

The report found government policies were often an impediment to greater mobility, especially for low-income households, and recommended a review of rental assistance requirements and “inefficient” stamp duty taxation.

People in Queensland, the Northern Territory and the ACT were the most likely to move for a job, with the Northern Territory reporting 22.6% of residents moving in 2010, when the last census was taken. Tasmania and South Australian residents were the least mobile, even while these states recorded the highest levels of unemployment.

The biggest issues limiting labour mobility, the report found, were personal factors, including age, marital status and – to a degree – education.

However, while marginal when taken individually, a series of tax and housing affordability problems were discouraging households from relocating for work, according to the report. Other common complaints were a lack of housing in some areas, particularly affordable housing where an influx of workers had meant demand for housing outstripped supply.

Productivity Commissioner Alison McClelland, who is leading the study, said it was a problem also identified in larger cities, where some workers were unable to live close to areas of employment growth.

And she said there were issues with transaction costs for households who did want to relocate. “Stamp duty is something many enquiries have looked at and there have been suggestions it should either be reduced or eliminated in favour of land tax which is a preferable tax in terms of efficiency and equity,” she said.

A Grattan Insitute report into housing affordability released at the end of October also suggested a broad property tax would create less distortion in the housing market and allow better mobility between homes. That report also found the bulk of government housing support flowed to homeowners, while renters received less than 10% of benefits.

“For low-income workers the cost of rent is certainly an issue and the way [Commonwealth] Rent Assistance works across the country has been shown to be a problem. The level of assistance does not meet the rents that many people are having to pay particularly in full employment areas,” Professor McLelland said.

The availability of public housing was another issue the Commission’s paper identified as a problem for low-income households.

But Veronica Sheen, a research associate at Monash University, said the report didn’t adequately address some of the deep polarisation “that we have in the employment market and housing market”.

“There is this growth in low-wage and precarious employment that was documented by the ACTU in its report last year on insecure employment, so a greater proportion of jobs are casual and contract,” Dr Sheen said.

“If you can only find a job for six months or a year, what incentive do you have to move to it? So even where there is employment growth, wages aren’t good enough for people to cope with the cost of moving.”

457 visa migrants necessary

Professor McLelland said encouraging international migration has been “very, very important” in helping deal with skills shortages. The draft report found “the contribution of international migration is substantial” in the health sector, as well as for the mining industry.

Phil Lewis, the Director of the Centre for Labour Market Research, said the major problem was getting people to live in remote areas where living standards were below those in urban centres. “If you’re a skilled tradesperson the living conditions [in remotes areas] will be pretty poor for your family and you can probably make a good living from living in the city,” he said.

The ACTU has long been critical of migrant visa programs, pushing the previous Federal Government to tighten rules over the scheme. Last week it asked the Goverment to review the holiday visa program in light of higher youth unemployment.

West benefits from fly-in, fly-out workers

Some issues related to attracting skilled workers to remote regions were mollified by a boom in long-distance commuting. The report found fly-in, fly-out workers had “been instrumental in attracting sufficient mining and construction workers to mining areas during the resources boom, and spreading the benefits of the boom across the economy more broadly.”

Professor McLelland said although this trend met the needs of workers, the research had also identified some negative impacts on the communities, especially where there was a large increase in the temporary population.

In her submission to the Commission’s labour mobility study, Fiona McKenzie, the principle research leader at the Remote Economic Participation Co-operative Research Centre, said governments and companies had more work to do.

“Resource-dominated communities do not reap many benefits from a highly peripatetic workforce, and it can be argued, are both marginalised and penalised for having resources development nearby,” she wrote in the submission.

The remote town of Ravensthorpe isolated 180 km west of Esperance and 180 km east of Albany, for instance, experienced a short-lived boom and now contends with empty homes and expensive, unused infrastructure. The town was home to a major nickel project started in 2001 by BHP Billiton with the backing of the WA government. But instead of being a fly-in, fly-out operation, the town was to host mine and construction workers.

Operations began in 2008, but ceased in 2009 when major production flaws were found. Subsequently a Canadian company restarted operations, but slashed the workforce.

Professor McKenzie said the rapid construction “caused incredible housing inflation”. She said the town now had 200 “substantial” houses, many of which lay dormant and had attracted vermin.

“Port Hedland and Karratha needed this kind of infrastructure and housing investment, but to elevate [other, smaller, wholly resource dependent towns] doesn’t make sense she said. "In terms of affordability, that’s when you pay more than 30% of your salary to have a roof over your head. In [Port Hedland and Karratha], the house price is around $1 million, but it is affordable because people are on big salaries.”

“That said if you’re working at a shop it’s very difficult. You’d have to be married to someone working in mining in order to have access to housing. But then six months ago the median house price in the Pilbara was $1.6 million, so its come down a lot.”

The State Government has done “little” prior to the Pilbara Cities Initiative to make land available in many areas where demand outstrips supply, she said. “It takes on average seven and a half years for crown land to be at developable status with all the necessary services”.

The report cited inefficient land use planning processes “and the delayed release of land for residential development” as contributing to housing affordability and preventing labour mobility.

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