Last year when negotiations began to ramp up, AMMA commissioned Deloitte Access Economics to produce an independent analysis of the economic pressures facing Australia’s offshore oil and gas marine support sector.
Unsurprisingly to all of us involved in the gas industry, the Deloitte report found increasing labour and operating costs, productivity concerns and macroeconomic challenges are significantly impacting the industry’s international competitiveness.
The evidence shows the high cost, low productivity operating environment for Australia’s resource industry is presenting very real challenges for support companies that are critical to the project supply chain:
- On a ‘per vessel’ basis, wages and total expenses have increased by around 40 per cent since 2007–08, while revenue has increased by only eight per cent.
- Between 2008–09 and 2009–10,the sector’s profits fell by 27 per cent, while at the same time wage costs grew by around 19 per cent.
- As an example, wages have almost doubled over ten years for schedule 1 integrated ratings (general seafarers now earning in excess of $170,000 per year); and increased by more than 70 per cent for schedule 8 roles (more specialised roles earning about $240,000 per year).
- Profit per vessel in 2011–12 was half the level recorded in 2007–08.
- Since 2007–08, wages and total expenses have doubled while revenue increased just 50 per cent.
Deloitte found that “the pace of wage growth in the sector has clearly been disproportionate to wage and price growth in the Australian economy overall…the offshore oil and gas marine support sector is in a position where any significant, sustained growth in wages could threaten its ongoing viability”.
This report was commissioned simply to build a factual basis for discussion amid shifting economic conditions in our industry. What it told us is that our industry must avoid an outcome similar to that of 2010, when the previous round of collective enterprise bargaining agreement negotiations took place.
Four years ago, the MUA used a series of destructive strikes to extract exorbitant wage increases. Some vessel operators – mostly medium-sized employers based in Perth – were losing $750,000 per day to strike action, forcing them to agree to 30 per cent pay increases.