Builders mad: Spin slips cog, no ‘sorry’ from Adam Giles

p2311-Giles-presser-1By ERWIN CHLANDA

 

Sixteen builders and contractors, including the three biggest in town, this morning vented their anger over NT Government initiatives to increase Aboriginal employment.

 

They were incensed about an announcement by Chief Minister Adam Giles that as of next year, 70% of government contracts in the bush must be done by Aboriginal companies.

 

This morning they were told by an advisor to Mr Giles on a phone link, that it was all a mistake.

 

And they left no doubt about their opposition to the “Indigenous Employment Provisional Sum” scheme.

 

Mr Giles said in a media release on February 8: “We’ve introduced a new remote contracting policy that requires 70 per cent of all contracts for civil and construction projects under $5 million in remote Aboriginal communities go to local Aboriginal businesses by 2017.”

 

Explained the advisor: “No, the actual wording was, contracting in remote communities must go to local businesses in that community or in the region.”

 

“We are local as you get,” said the meeting chairman, Steve Brown, an electrical contractor who is also the CLP candidate for Araluen: “The way it is worded it sounds like we are going to lose our businesses short of some sham way of turning them into Aboriginal businesses.”

 

“I understand the wording was wrong in the media release,” said the advisor and referred the meeting to notes sent to them for purpose of today’s meeting, saying “70% of all Northern Territory Government tenders in remote communities must be delivered by local businesses by 2017.”

 

The notes say local has the “cascading” meaning of “a) in the community, b) in the region and c) in the Territory”.

 

This prompted prompted one attendee at the meeting to observe that it doesn’t matter whether a tendering company is Aboriginal or even has Aboriginal staff.

 

The advisor agreed there had been “some confusion around this” to which the chairman replied: “I would say this would be an understatement.”

 

Said another attendee: “There was either a mistake in the media release or the Chief Minister is back-pedalling.”

 

“It wasn’t a mistake on behalf of the Chief Minister. That’s a negative,” replied the advisor.

 

The fact is that no retraction nor clarification has been issued by the Chief Minister since the media release on his behalf 12 days ago.

 

The advisor conceded there are Aboriginal communities which do not have businesses and that is much more the case in the southern part of the NT.

 

An audit had revealed that in the first six months of 2014, there had been $425m worth of contracts in remote communities, and 35% of them were delivered by Aboriginal businesses, claimed the advisor.

 

“A lot of them” were delivered by interstate businesses “and we want more local businesses delivering these projects,” he said.

 

He mentioned the Alice Springs firm Probuild entering into a joint venture with an Aboriginal firm for a contract in the Top End as an example of what the NT Government had in mind, and which would create “a better opportunity of winning that contract”.

 

“I take it in the Probuild case this was used to exclude other contractors, is that correct?” asked Mr Brown.

 

“There was no exclusion whatsoever. They were the only business which could demonstrate that local content,” came the reply, which did little to end the aforesaid confusion.

 

If there is only one “local” business available to partner with, and that is already tied up with another bidder, would that not disadvantage other tenderers, asked one attendee.

 

“That’s all about building local relationships,” came the reply.

 

The advisor said all the advantage Probuild got was the 25% weighting for local content.

 

“So they had that 25% advantage over other locals,” asked Mr Brown.

 

“Wouldn’t these Aboriginal businesses in remote communities be government funded anyway,” asked another attendee.

 

“None of them are government funded,” replied the advisor. “[But] they are often not for profit.”

 

“So they are a charity,” said one attendee.

 

They might get some public money but they are “not funded in an operational way”.

 

This prompted one attendee to quote the case of an Aboriginal company in Alice Springs which, he said, although having split into a charity and a Pty Ltd firm, is operating out of premises that were gifted to them: “They’ve got a leg up there with their commercial land, yet they are getting select tenders in Alice Springs.”

 

The advisor: “They don’t get it handed on a plate. It is value for money for the taxpayer.”

 

Will the new local content committee determine who gets a contract, the group wanted to know: “You can get a shelf company, put on an Indigenous person as a director for $500 a week, and you have a local indigenous company?”

 

p2311-Giles-presser-2The advisor countered, along the lines, “we know what companies are doing”.

 

Not so, says another attendee, and quoted a major company that is linked to a supposed Indigenous firm, that operates out of the same building, and is getting work on the basis of being Indigenous.

 

The advisor: “It happens all over Australia” that people are maximising opportunities.

 

Attendee: “So we’re just being encouraged to play the system.”

 

The tradies and builders at today’s meeting may have had a win on the local vs Indigenous front. They seem confident the new local tender committee will make a difference.

 

But on the “10% provisional sum” issue they are clearly still pissing into the wind.

 

This is how Mr Giles described the Indigenous Employment Provisional Sum scheme on February 8: “We’ve set a number of ambitious employment targets and policies including doubling public sector Indigenous employment from 1800 to 3600 employees by 2020, and initiating Aboriginal employment requirements for all Government infrastructure contracts above $500,000.”

 

“You have altered the market economy,” said one attendee to the advisor, “and companies are simply doing what they can to survive”.

 

The advisor didn’t get any thanks for suggesting the people at the meeting didn’t understand the policy: “We want more Aboriginal people in the private sector,” he said. “The policy is working and has been very successful to date.”

 

He said the labor component of a job is usually 30%. As the NT population is 30% Aboriginal it follows that 10% of the labor component should go to Aborigines.

 

“You’ve got three people on the job. You’ve got to make sure one is Aboriginal. Simple.”

 

Not so, say the builders. These are some of the points they made at today’s meeting:–

 

• The people “on the nail bag who are doing the work” don’t have the time to implement the scheme because they don’t get paid for that time.

 

• Contractors have to get rid of trained staff to employ Aborigines.

 

• To compensate for the losses inherent in the scheme head contractors are sourcing materials from interstate instead of from local suppliers.

 

• To the advisor: “You are wrecking the market. You are out of touch.”

 

• The Aboriginal percentage of the labor force capable of being employed is nowhere near 30%. “It’s more like 5%,” said one attendee.

 

• The claimed numbers of Indigenous people employed in the construction industry as a result of the scheme, when compared to earlier employment levels, are without foundation.

 

• The government isn’t responding to concerns that naming people as Aboriginal employees may be against the law. The advisor said names are not part of the departmental records.

 

• A reputable, skilled subcontractor “identifying as Indigenous” is being approached by “about 90% of the firms in town to carry out work on their projects. These guys are charging up to 100 bucks an hour because they are in such high demand” under the 10% provisional sum scheme. It is not “actually engaging out-of-work Aboriginal people”.

 

• The scheme provides an incentive for importing Aboriginal workers from interstate: “Our kids are out of work. Our future is half hanging in the balance. With shit like this going on, it’s not going to build confidence in our town.”

 

• The scheme should be taken out of the tender process, run independently from it, and the builders and subbies who take it on should be remunerated for the administration of the scheme.

 

• The people at the meeting “agreed to disagree” with the advisor and have asked for further discussions, with the prospect of meaningful changes being able to be made.

 

 

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10 Comments (starting with the most recent)

NB: If you want to reply to a previous comment, start your comment with this notation: @n where n is the number of the comment you want to reply to.
  1. Paul Parker
    Posted February 26, 2016 at 11:10 am

    Re: Melanie Ross Posted February 25, 2016 at 9:59am: Perhaps the statement meant to say “On Feb 8 Adam Giles announces a new Aboriginal Affairs strategy, three yawns in the making…”
    Good policy requires considerable public discussion.

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  2. Melanie Ross
    Posted February 25, 2016 at 9:59 am

    So let me get this straight.
    On Feb 8 Adam Giles announces a new Aboriginal Affairs strategy, three years in the making, that says “a new remote contracting policy that requires 70 per cent of all contracts for civil and construction projects under $5 million in remote Aboriginal communities go to local Aboriginal businesses by 2017.” This will create jobs and economic development on remote communities according to the Chief Minister.
    Now, a couple of weeks later, we have the CLP’s candidate announcing to the media that the Chief’s announcement was wrong (this is what Steve Brown told the ABC) and a faceless advisor tells builders, including the CLP candidate, that major plank of the CLP’s Aboriginal Affairs policy is a “mistake”.
    All I can say is WTF?

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  3. Fred the Philistine
    Posted February 23, 2016 at 7:18 pm

    @ Paul Parker: I think this would be better said on the 1st of April. Who would want to take on the NT, as it is a liability to any state.
    Don’t forget, it used to be run by SA, until the NT decided to run itself. Technically the NT cannot operate without federal monies.
    The question I ask is how long can the other states keep supporting the townships like Alice? There is no industry here and rides on the back of welfare. The housing prices are ridiculous.
    [ED – The NT was run by Canberra before self-government.]

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  4. Sean
    Posted February 22, 2016 at 11:28 pm

    New depths of stupidity for Giles. Continually demonstrates his complete incompetence in every industry.
    Where will you head next Giles? Back to NSW, Qld? Or perhaps China where you’re feathering your nes.

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  5. Paul Parker
    Posted February 22, 2016 at 5:38 pm

    Re: Another Observer Posted February 21, 2016 at 10:48 pm.
    There is no need for NT residents to consider administration by the Commonwealth, for the Commonwealth puppeteer already controls NTG however it suits the Commonwealth.
    Is time NT residents consider re-merger with South Australia, the merged government will show more concern with populations away from Adelaide and Darwin.

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  6. Joel Olzomer
    Posted February 22, 2016 at 9:36 am

    @ 3 – Fred the Philistine: What you describe would certainly be a desirable outcome. Unfortunately, the policy measures in place do not deliver this. The policies seek to redistribute jobs from those employed on merit to those employed on ethnicity. Due to the rushed implementation, the work redistribution of jobs is not necessarily occurring due to natural attrition.
    I would challenge you to name an instance where a young Aboriginal person has been denied a construction based apprenticeship due to their ethnicity.
    I certainly cannot think of any construction business in town who would do such a thing. This policy represents a failed attempt to outsource social change.
    The end result is importing of workers who identify as indigenous, (some) companies utilising interstate suppliers to reduce material cost in an effort to cover the losses of failing to fully achieve a productive 30% indigenous work force.
    Other consequences are increased labour cost due to demand exceeding supply of Indigenous workers and long term employees being no longer as valuable as one who identifies as Indigenous.
    The end result is a crippling effect on the construction industry and the wider economy, making everyone’s jobs harder and therefore, driving building costs and cost of living ever higher.
    For all the noise about the relic of Payroll Tax – which effectively punishes those who employ too many people – Payroll Tax has NOTHING on the damage that the Provisional Sum is inflicting.
    Unfortunately, the policy writers are completely blind to this. Alice Springs is in the midst of a crisis of confidence. Causes range from global issues such as an economic downturn emanating from our largest trading partner, China, to local issues such as rampant and under-reported crime, for example vehicles being burnt out on Friday night that somehow do not warrant a police media release.
    This economic mismanagement dressed up as smart social reform, represents just another “cut” amongst a thousand others to the future of the Territory that we all love and call home.
    @ Braedon: An intriguing comment – Would love to know more.

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  7. Another Observer
    Posted February 21, 2016 at 10:48 pm

    Perhaps it is time that the NT residents started to seriously consider administration by the Commonwealth.
    Given that we have public servants and “policy” makers who are failing to see the increasing costs that they are imposing on private sector businesses, public servants who feel that it is their right to target some business for “compliance” but not others, it is all really starting to get beyond a joke.
    One just has to take a look around the town – those businesses have gone, and they aren’t coming back anytime soon.
    Perhaps the NTG could provide an “in service” to their employees instructing them on how the funds that they “administer” (and I use that term very loosely) are actually raised.

    View Comment
  8. Braedon Earley
    Posted February 21, 2016 at 6:45 pm

    Hypothetically, say you were a minority government, desperate to stay in power – how would you do it?
    One idea that springs to mind is that you could find the single most financially destitute elected currently independent MLA.
    Then, hypothetically of course, work out some way of getting funds to that independent indirectly, maybe through a relative, who, hypothetically, meets the criteria in said story.
    All fantasy of course, but it would secure the balance of power. Of course this hasn’t happened, nor would any of the major construction companies facilitate it, so it couldn’t happen.
    Braedon Earley
    President, 1Territory Party

    View Comment
  9. Fred the Philistine
    Posted February 21, 2016 at 6:26 pm

    I think this is wonderful news for our indigenous people.
    They can finally apply for an apprentice position get a trade and then they might be able to fix their own homes on the communities.
    There are then no excuses that there is no work for them. The builders will just need to be patient with them. Imagine the impact of this, less on unemployment benefits, self pride, and this could be the beginning of Closing the Gap.

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  10. Joel Olzomer
    Posted February 21, 2016 at 4:40 pm

    A balanced article.
    It should be said that there is overwhelming support within industry to play a role in providing work opportunity for the disenfranchised.
    There is certainly a substantially higher indigenous representation in the construction industry than the government departments handing out the contracts.
    However, as it currently stands, despite the flawed statistics based upon back of the envelope numbers, the NT Government policies are not making a real impact.
    Rather the policies seek to rob Peter to pay Paul. Where “Paul” may very well be a person who identifies as Aboriginal and hails not from Yuendumu but rather the Yarra, Melbourne. This apparently, represents successful policy by the CLP minority Government.
    Upon the industry group raising a multitude of concerns based upon the real world impacts (as outlined in the dot points of the article) the Government sought to deflect the reality with the view that the industry is simply “using the policy wrong”.
    Surely any government or policy maker worth their salt should understand the basics: a policy that is not operating as expected is not down to misreading the policy but rather the content of the policy itself.
    In this instance, the NT government has failed to understand the most basic economic principles of supply, demand and a competitive industry seeking to adapt to Government mandated, disruptive economic policies.
    The fact is, this policy seeks to raise a group of people up in a hamfisted manner all, whilst damaging the jobs of thousands of others.
    The result is not social advancement but rather economic mismanagement, unprecedented over governance, diminished labour force productivity, upward building cost and overall market place interference.
    Some true progress could be achieved if the government were to engage with industry for a change, and enter into meaningful discussion, rather than trying to “slip things through”.
    The long term people of the community have infinitely more real life experience than the government consultants and bureaucrats.
    For a start, remove the market distorting “provisional sum” and replace it with a tender weighting that methodically examines a company’s previous and current achievements in growing the indigenous work force and developing the overall local capacity.
    Unfortunately, listening, engaging and learning seems unlikely in the twilight of this government.

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