Below is an edited excerpt of APESMA CEO Chris Walton’s speech yesterday to the Australian Engineering Week’s forum – Adequate Infrastructure – Achievable Goal or Pipe Dream?
There is little doubt that Australia’s ability to deliver infrastructure is being significantly hampered by a lack of available skills.
In fact this was one of the main findings of a recent Senate Inquiry into Australia’s general shortage of engineering skills.
During this Inquiry Skills Australia – the government body that keeps an eye on workforce shortages – said that Australia will need an extra 37,000 professional engineers by 2016.
It’s a problem that APESMA and other organisations have been warning about for decades now, but governments have been too late in addressing the problem.
Living in Victoria as I do we have a premier who continually bemoans the increasing construction costs for infrastructure projects.
Recently the COAG established an independent panel to review construction costs and productivity.
But governments had only look in their own backyard if they want to find a major source of the increasing project costs.
For years both state and federal governments have failed to address the growing general skills crisis in engineering.
In fact governments have made it much, much worse.
APESMA recently analysed ABS statistics on the amount of engineering construction completed back to the mid-1980s.
We found that spending on public infrastructure projects has fallen through the floor.
In the 1980s 72 per cent of all engineering construction in Australia was for public infrastructure – things like roads, rail, electricity assets and water projects.
In 1990s this fell to 67 per cent, in the 2000s this fell to 45 per cent and this decade it fell again to 34 per cent.
On top of that we found that the private sector is completing more and more of these public infrastructure projects:
1980s – the private sector did 29 per cent of the work, in the 1990s – 34 per cent, in the 2000s – 41 per cent and in the 2010s – 50 per cent.
Now the reason this is bad news for skills is this, and I quote from the recent Senate Inquiry report:
“Up until the early 1990s the public sector provided engineering skills training to cadets and graduates. Typically employees would enter the public sector after high school or tertiary studies. Following perhaps a decade of on-the-job experience, many of these workers would be head hunted by private industry. The practical effect was that industry did not have to train its workers: governments did.”
While the public sector is vacating the field of on-the-job engineering training, the private sector has struggled to step up to the plate to fund the training needed to develop Australia’s engineers, particularly younger engineers:
“The skills shortage has serious flow on effects for the training of engineers. Many industries feel like they do not have time to train graduates, particularly as graduates with more than three or four years' experience are highly employable and likely to move to another job. Training and development for experienced staff can fall by the wayside amidst high workloads and low retention rates, further worsening an already deficient situation.”
And the effects on the public sector have been just as damaging:
“The first and most obvious implication of this is that government departments, having shed their engineering staff, now lack any real in-house engineering expertise.”
This lack of public sector expertise is causing more than problems with training. For example you simply cannot deliver a significant infrastructure project without skilled engineers.
And how could you possibly scope an infrastructure project or figure out how much a bridge or a road tunnel might cost unless you are an engineer who has built one before?
While that statement is bleedingly obvious to most people, it is not a fact the public readily understands.
This means in turn that governments can get away with cutting engineering numbers for short term savings without an immediate impact on the public’s daily lives.
Unlike nurses, or teachers, or police, cutting engineers is relatively politically painless – at least in the short term.
We are seeing this right now in many states that have had a recent change in government.
While the states are shedding engineering numbers and denying young engineers the opportunity of the experience and training historically found in the public sector, the private sector has found its own challenges.
Surveys of APESMA members in the mining and resource sectors show the mining boom has resulted in galloping average wage increases averaging 4.9 per cent for engineers in the private sector.
Unfortunately for those in the public sector they are receiving more modest pay increases of 3.6 per cent per year.
The private sector’s reaction to the skills shortage isn’t to significantly increase the stock of skills – it is to throw more carrots at those few who already have the skills.
It’s a paradox that confronts many engineering graduates.
The private sector seemingly won’t significantly invest in their skills but at least they can get a job there – unlike the public sector which is cutting engineering stocks to the bone.
Unfortunately the public sector is doing little to help the private sector invest in skills. Clearly there is a major opportunity for the public sector to work with its private sector partners on infrastructure projects to develop targeted training programs as part of a major project.
This way we can ensure that there is a growing bank of relevant skills in our younger engineers.
One can only imagine the kinds of problems we are going to face when the last of our experienced baby boomer engineers leave the workforce and these younger engineers are asked to step up to more senior roles.
Of course the skills crisis is dramatically increasing the cost of infrastructure, particularly large public projects.
“It is clear that public sector capability to act as an informed purchaser and adequately scope and oversee large infrastructure and construction projects has been severely eroded over the past decades.”
“In a 2008 survey conducted by Blake Dawson, 83 per cent of respondents reported that skills shortages negatively impacted their ability to develop scope documents to an adequate standard.”
“The shortage has resulted in poorly conceived and poorly delivered projects by both the public a
nd private sectors, culminating in cost blow outs and delays. In part this is because of a decreased engineering capability in the public sector – which impacts on the quality of tender selection and indeed even on the request for tender proposal itself.”
Given that there are limited financial resources available to any government if infrastructure projects keep blowing out we will be unable to build the amount of infrastructure that the public needs.
Journalists covering public sector infrastructure projects are set for a field day because of the engineering skills crisis.
While we all know of some recent examples of public sector infrastructure that has blown out or been delayed. These examples are just the tip of the iceberg of what we can expect in the future.
When public sector infrastructure spending inevitably picks up after the Global Financial Crisis our skills crisis will be laid bare in an unprecedented way.
When state governments try to catch up on the lack of public infrastructure during the relatively lean years they’ll turn to their departments and find them devoid of properly skilled engineers.
At least the private sector is able to keep their blowouts relatively well hidden from the newspapers.
The ways forward are difficult and will require careful investment from governments – as all major problems do.
We now need to fight this on all fronts –
- by encouraging our kids to enrol in engineering degrees,
- by helping students graduate with an engineering qualification,
- by giving younger engineers greater skills,
- by retaining our best engineers, and
- by bringing in some engineers from overseas to help plug the gaps.
Unless we do that we will pay higher taxes, spend more time in traffic, work longer hours, be frustrated with people unable to do their jobs and fail to maintain the quality of life that Australia is famous for.