Japan concerned by labour costs and lack of key infrastructure

Christian Porter
State Treasurer

Japan’s industrial conglomerates have flagged concerns over spiralling labour costs in Australia, and the lack of key infrastructure to facilitate resource projects in Western Australia. West Australian Treasurer Christian Porter, who visited Tokyo for discussions with Japanese industry on 30th September, said key trading houses had also raised the issue of the mining and carbon taxes with him.

Mr Porter met with Mitsubishi — co-developer of the troubled Oakajee port project in WA’s Mid-West — and said he came away believing it was “business as usual” for the venture. He said Mitsubishi had reaffirmed its commitment to the project and made it clear it would welcome a Chinese investor getting involved to help save the iron ore port proposal.

The $5.9 billion federal and state-funded port and rail project has foundered amid cost blowouts and the inability of Murchison Metals and Mitsubishi to proceed with the original plan. The project is regarded as vital for opening up the Mid-West iron-ore region and WA Premier Colin Barnett has given the parties until the end of December to seal a deal to construct it.

Mr Porter said Mitsubishi and fellow trading houses Sojitz and Mitsui had raised serious concerns over skilled labour shortages and the ensuing cost blowouts in resources projects. “They are finding that the costs of putting a project together in the construction phase are much higher than they might be because of the cost of skilled labour,” he said.

The Treasurer said WA faced acute skills shortages for “the foreseeable future” and urged the federal government to undertake a more radical expansion of the skilled migration program. He said the commonwealth’s recent enterprise-based migration program — under which the developers of large projects can bring in workers directly from overseas — was “welcome but ad hoc.” Mr Porter also called for extra commonwealth help for WA, saying the state had reached the limit of its infrastructure spending but was conscious that more investment was required.

“The availability of key infrastructure and common use infrastructure in Australia is a matter of ongoing concern for Japanese companies,” he said. The example of the difficulties in building a section of power line needed for the Grange Resources-Sojitz Southdown iron ore mine east of Albany, was indicative of the problem.

“That’s one specific example but it’s much broader than that. The companies have a very deep understanding that we are at the limits of our state government’s ability to spend on those things, but their observation was that in a growing economy like WA, there needs to be a greater effort on expenditure in these areas. “We take a firm view that we need some assistance in that regard.”

Mr Porter said the companies’ comments on the carbon and mining taxes were “very gently couched.”