It was the cook who did it. After years of claim and counter claim that Australia was pricing itself out of the raw materials business, a pay claim which would see a cook on an offshore oil and gas rig paid $240,000 a year proved the point about out-of-control costs.
Even the Australian Resources Minister and lifetime union member, Gary Gray, declined to defend the high pay rates on resource projects, particularly offshore liquefied natural gas (LNG) developments.
“We do have unreasonably wage demands in the LNG industry,” Gray told an oil and gas conference in Brisbane yesterday.
A former senior executive with the Australian oil and gas producer, Woodside Petroleum , Gray knows what he is talking about, but the fact that he said it is the real news because he is a member of a pro-labor government and some of his colleagues do not agree with him.
But, even the government’s staunchest defender of high union pay claims, the Minister for Infrastructure, Anthony Albanese, had trouble maintaining his position when it was pointed out that the cook’s pay claim for working on the $34 billion Ichthys LNG project meant he would have a fatter pay packet than the Minister.
“A cook on an oil rig gets paid more money than Anthony Albanese, if he thinks that’s the way we remain internationally competitive he’s on his own,” said Opposition Resources spokesman, Ian Macfarlane.
The latest debate about pay rates occurred at the annual conference of the Australian Petroleum Production & Exploration Association (APPEA), where Gray was among friends and other speakers who picked up where he left off.
One of those was Peter Voser, retiring chief executive of the oil major Royal Dutch Shell , another was Roy Krzywosinski, managing director of Chevron Australia, the local arm the U.S. oil major, Chevron Corporation.
Krzywosinski said that while Australia was in the middle of an LNG-project building boom valued at $160 billion, high costs and high government approval hurdles meant that another $100 billion of LNG projects hung in the balance.
“Governments and industry must make changes now to capture the second wave of investment. There is an 18-to-24 month window in which to do so,” Krzywosinski said.
Voser focused on the need to improve tax policies and government regulation if Australia was to continue attracting investment in its resources sector.
The outlook for new projects in Australia has dimmed since growth in China, the country’s major customer for its exports of iron ore, coal and LNG, started to slow and internal costs exploded leading to the cancellation of a number of proposed developments, including the $40 billion Browse LNG project which has Woodside and Shell as its major investors.
With the cooling in proposed new resource investment has come a series of reality checks, including a sharp fall in the value of the Australian dollar, and a decline in the demand for labor
Forecasts of a shortage of skilled and unskilled workers had led to an international recruiting drive, but have more recently given way to a preference for local labor.
Even Australia’s richest person, Gina Rinehart, who had won approval to import up to 1,700 foreign workers for her $10 billion Roy Hill iron ore mine is now expected to recruit locally – though she will probably be offering pay rates well below the $240,000 demanded by the Ichthys cook.