I’m delighted to be here today at this important conference on the future of tropical economies which builds on the State of the Tropics Report released a little over 2 months ago. And I’d like to thank James Cook University and the Cairns Regional Council for hosting this event and for inviting me to speak today on the subject of Human Capital – Utilising our greatest asset.
Human capital is the value that people provide through their skills, knowledge, and experience. It’s a critical factor in the future of tropical economies because the population of the tropics globally is large and growing. Currently 40% of the world’s population live in the tropics. And this is predicted to rise to 50% by 2050.
Of course we have a very different situation here in Northern Australia, which is Australia’s piece of the tropics. Only 4% of Australia’s population live in Northern Australia. That’s about 1 million people. It’s a number that barely registers when looking at the population of the tropics as a whole. This small population is sparsely spread over 3 million square kilometres.
The State of the Tropics Report identifies a number of other important differences between Northern Australia and other tropical economies. Northern Australia has higher GDP per capita, higher adult and childhood literacy and higher average mean years of schooling than other tropical economies.
And whereas nearly 30% of people in the tropics overall living in extreme poverty – which is defined as living on $1.25 per day – not even the poorest people in Australia are anywhere near extreme poverty. Australia has a generous welfare safety net and is a modern developed nation.
All of this presents a very interesting set of challenges and opportunities for growing Australia’s tropical economies which this Federal Government is committed to doing.
Because of its low population and lack of infrastructure outside of a few major population centres, most of Northern Australia is undeveloped and certainly less developed than other tropical economies.
However, it is also part of one of the most developed economies in the world and, by comparison with other tropical economies, the standard of living in Northern Australia is high.
One of the reasons emerging economies of the world experience rapid economic growth is because people are poor, wages and the cost of living are low and there is limited welfare or public assistance for people in poverty. This creates intense – even desperate - drive. Often those economies are also much less regulated than the developed world.
We have the opposite conditions in Northern Australia.
Earlier this month the Joint Select Committee on Northern Australia released its Final Report following its Inquiry into the Development of Northern Australia. The Parliamentary Committee’s report will inform the Federal Government’s White Paper on Developing Northern Australia which will set out the Government’s vision for the future of Northern Australia and a policy for its development.
There’s some good thinking and analysis in the Committee’s report. However, I didn’t know whether to laugh or cry when I read the Committee’s Number 1 Recommendation – that the Australian Government should create a new Department of Northern Australian Development.
I don’t agree that the Number 1 priority for developing Northern Australia is more bureaucracy. Governments and public servants don’t generate economic growth or prosperity; they don’t create jobs and they don’t start businesses. Private capital investment and commerce do that.
If the Government seriously wants to develop Northern Australia then creating a Big Fat New Bureaucracy is not going to help. If anything it will make things worse.
Governments can’t develop Australia’s north. Governments can only create an environment that will foster the flow of capital into Northern Australia and provide the conditions that encourage investment.
Government has already taken major steps to create those conditions by signing free trade agreements with Korea and Japan earlier this year. It seems likely Australia will also secure a free trade agreement with China before the end of the year. These are substantial achievements for our country, achievements only Government can deliver.
Northern Australia sits on the doorstep of the fastest growing and most highly populated region in the world. And it has vast tracts of undeveloped land and sea, abundant in natural resources. There are substantial opportunities for the Northern Australia, particularly in the pastoral, mining and agricultural industries.
There are also the secondary industries that flow from these developments – like roads, wharves, electricity grids, ports and other facilities and the utilities and technology infrastructure needed to operate those facilities. Its vast geography has great unlocked potential.
The Committee’s report also identified a number of impediments to development in Northern Australia, including low population, lack of infrastructure, high cost of living and utilities and the regulatory environment, particularly green tape. These are all examples of not having the right conditions for investment.
For example, to realise the potential of Northern Australia we need a regulatory approval framework that embraces agility and entrepreneurship, provides certainty and predictability for people wanting to do business and is not ridiculously expensive. And we don’t just need this in Northern Australia – we need it everywhere.
Today I am focussing on the need for human capital. Having a skilled, educated and job ready workforce on the ground is essential to attracting capital and investment.
One of the recurring themes in the Committee’s report is the need to increase the population of Northern Australia. There are complications and limitations if businesses have to rely on a Fly In Fly Out or Drive In Drive Out workforce and the report identifies some of these. What development projects in Northern Australia really need are local populations that are job ready and educated.
The Committee’s report observed that:
“One of the major constraints that we face is building our northern population. Australia must find ways to build its population in the tropical North—not only to attract people, but also to retain them. That is absolutely critical. There are great opportunities available in Northern Australia, but we need more people living and working in the North to be able to realise these opportunities.”
I find this observation really interesting. Here is a major Parliamentary Inquiry saying that Australia needs to work out how to get more people to move to Northern Australia because there aren’t enough people living there.
Yet when people talk about remote Indigenous communities in Northern Australia we often hear the very opposite – that there are no jobs or opportunities in these areas, the communities should be closed and the people there moved to southern population centres.
How can there be a shortage of labour in Northern Australia on the one hand and a shortage of jobs on the other?
To me it’s a no-brainer. Indigenous communities should be the first port of call to meet the demand for labour in Northern Australia.
By 2040 – which is about 25 years away – it’s estimated that half of Northern Australia’s population will be Indigenous. Indigenous communities are younger and growing faster than the rest of the Australian population.
The population pyramid for Australia as a whole looks like most developed countries - with an aging population and the largest distribution of population in the 30 to 55 age groups.
The population pyramid for Australia’s Indigenous population is shaped like the population pyramid of developing countries like Ghana or India - wide at the bottom (younger age groups) and tapering off at the top (older age groups).
People from Indigenous communities in Northern Australia don’t need encouragement or tax incentives or anything else as an inducement to live there. They want to live there. In fact they’ve fought for hundreds of years to stay on their lands. Here is a source of human capital in Northern Australia right under our noses.
So why is it being ignored? Because most Indigenous Australians in Northern Australia today don’t participate in the real economy and many aren’t job ready or adequately educated.
At the beginning of my speech I talked about some of the statistics for Northern Australia compared to other tropical economies. These statistics obscure some important data – the gap between Indigenous and non-Indigenous Australians in employment and education.
Northern Australia may have a relatively high GDP per capita - but most Indigenous people in Northern Australia don’t partake in it. Northern Australians overall may have high literacy and high average mean years of schooling - but many Indigenous people in the region do not. In fact, as we all know, many Indigenous children in remote and regional Australia are not even attending school.
In many respects, the generosity of Australia’s welfare system and the absence of extreme poverty places Northern Australia at a disadvantage compared to other tropical economies. Welfare in Australia has gone from being a temporary measure to get people who have fallen on hard times back on their feet to being accepted as a way of life in some circles. That is certainly what has happened in remote Indigenous communities. I call it state-sponsored poverty. Generations of families have become trapped in the welfare safety net.
The solution to all of this is not a mystery. It involves getting Indigenous children educated and Indigenous adults into a job.
I have spoken and written extensively on how to move people from welfare to work through case-managed intensive training that addresses all the barriers to employment. You can find links to these speeches and articles on my website.
This afternoon I want to focus on the education of children in remote and regional Indigenous communities and my thoughts on how education can and should be provided in these areas.
If the governments of Australia, Queensland, Northern Territory and Western Australia are serious about the development of Northern Australia then they need to focus very seriously on Indigenous education and take proper steps to deliver first class education to children in remote communities.
The education of children doesn’t start when they turn 5. The Forrest Review highlighted the important area of 0-4 years and primary school. I agree with the Forrest Review’s approach of starting “in the womb”.
In Indigenous education initiatives there has been a lack of focus in 0-4 and primary levels compared to secondary and tertiary education. Programs will not be able to penetrate deeply into Indigenous communities at the secondary and tertiary level if those students have not completed primary education to a satisfactory level.
For primary aged students the first imperative is that every Indigenous child have access to a fully resourced primary school with full time teachers who live in the community where the school is located.
Yet there are primary aged children living in remote Australia today who do not have access to a fully staffed primary school. For example, some communities have Homeland Learning Centres – where unqualified “teaching assistants” are employed from the community to operate the school day to day and qualified teachers visit periodically.
Any facility that does not have full time teachers is ineffective and a waste of money. These types of facilities create an illusion that children are being educated when they are not. It would be better to have no education facility at all. That would at least force education departments to confront the challenge of how to genuinely educate those children.
It’s my view that in remote areas one primary school should service several neighbouring communities with transport provided to collect and return children each day. Distance travel is an accepted part of life in remote Australia. One primary school should be designated to service all communities within, say, an hour’s drive. School transport should be provided to collect the children each morning and return them at the end of each day.
I have visited places where there is a fully staffed primary school in one community and homeland learning centres in communities sometimes less than an hour’s drive away. Each of those homeland learning centres costs money to build, maintain and operate, costs that could be redirected to transporting children to a district primary school servicing several communities.
A district primary school approach has the additional benefit of creating jobs driving school transport. People in the community should be hired in those jobs.
The second imperative is that focussed remedial intervention needs to be provided in remote primary schools with poor NAPLAN test results or poor attendance records.
Many schools servicing Indigenous communities are not capable of delivering an effective education to children even if they attend school. Some schools are not equipped to teach all the children in the community. For example, I have visited schools that are resourced for the small number of children who come to school but not for all the children in the community who should be. The schools don’t have enough chairs, desks and equipment for every child in the community.
State and territory government departments should develop a plan for auditing current resources and capabilities and a plan for resourcing schools in these communities to teach all children in that community effectively. In communities with a long history of truancy and poor schooling, schools will struggle to provide quality education outcomes to students most of whom will be well behind the level they should be and all at different levels.
Departmental plans therefore also need to include a plan for remedial education and working with children to enable them to catch up.
Thirdly, the standard expected of teachers in schools in remote Indigenous communities should be higher than for regular schools.
Disadvantaged communities need the best teachers. Children in these communities are behind in their learning and may have never received any real education to speak of. Illiteracy and innumeracy rates are high. And most children come from homes where the adults have not been educated either. These circumstances require teachers who are highly skilled.
All teachers who teach in schools where a significant proportion of students speak an Aboriginal language at home, should also complete appropriate training in teaching English as a second language.
As an incentive to attract the best teachers, governments could offer scholarships waiving or reducing University fees for tertiary students who commit to completing, say, a 4 year placement in an Indigenous school and who achieve a Distinction average in their course studies. Any such placement should not happen immediately after graduation. It is better that the teachers get experience teaching before teaching in a remote community.
It should also be a clear expectation for all remote Indigenous teaching posts that teachers be willing to become part of the community, get to know the locals, participate in community events and activities, make friends, go fishing, coach the kids at sport on weekends and so on.
Teachers who are disengaged from community or complain if the children turn up because it increases their workload should be transferred out. Teachers who don’t have the right attitude should not be employed to educate Indigenous children.
I was highly critical of the decision of Northern Territory teachers to go on strike at the beginning of this school year after I heard that one of the justifications for striking was the increased attendance at school arising from the Australian Government’s truancy push. This is the wrong attitude.
When it comes to secondary education I believe a different approach is required. Effective secondary education requires a depth of teaching expertise across a range of subjects. It cannot be delivered on-site in small communities. The best approach is therefore for all secondary students to attend a regional secondary school that offers weekly boarding facilities.
Whilst some secondary students have the opportunity and desire to attend boarding schools in major cities or regional centres, this is not available or suitable for everyone. Enabling students to board on a weekly basis in or near their own communities will give more students access to secondary education.
In remote areas, one secondary boarding school could service communities within, say, a 2 to 3 hour drive. School transport should be provided to transport students home for the weekends.
Again, jobs will be created driving school transport and also for “house parents” in boarding facilities. People from the communities should be hired in those jobs. This creates jobs for community members and appropriate support for the students while living away from home.
Focussed remedial intervention also needs to be provided for secondary students who have not had an effective primary education. For some secondary students it may be better to address illiteracy and innumeracy in the same way as adult illiteracy and innumeracy and focus on job readiness and job training, rather than remedial schooling. However, secondary students should not be written off and should have the opportunity to complete their schooling with remedial intervention opportunities.
Finally, I strongly support fostering a partnership approach where remote schools – primary and secondary – partner with high performing schools or universities in major Australia cities, like Sydney, Melbourne, Perth and Brisbane. This presents a range of possibilities. Teacher exchanges is one example. Another possibility is to have classrooms in remote schools “Skype in” to participate in lessons being held in partner schools. The only limit is imagination. For city schools and universities, partnerships provide obvious benefits to students and teachers having an opportunity for deep engagement with remote Indigenous communities.
This brings me to another observation. Internet connectivity is perhaps the most effective infrastructure that can be delivered in remote communities. It opens up a raft of possibilities for supplementing and enriching education and experiences of children in remote areas. And it’s not hard to deliver. I have been in communities where something as basic a mobile phone tower has opened the community up to the whole world.
I believe that the approach I have just outlined is the most effective blueprint for educating Indigenous children in remote communities.
And this approach will also help meet the unmet demand for human capital in Northern Australia. Ensuring that Indigenous children today get a proper education will do far more for the development of Northern Australia than a new government department ever will.
It’s not just governments that can make a difference here. The private sector also has a part to play. Any company who is looking to invest in projects or developments in Northern Australia should be considering now what steps they can take to ensure they have access to a local educated workforce in the future.
This is something that large corporations already do in other tropical economies. So why not In Northern Australia?
I’ll give you an example. BHP Billiton is the principal investor and operator of an aluminium smelter in Mozal in Mozambique. This project provides 55% of Mozambique’s exports. Some years ago BHP Billiton identified that the problem of malaria infection in Mozal was costing its business through reduced productivity, company medical costs, replacement recruitment and other things. So it invested in developing highly successful anti-malaria programs in Mozal. These reduced adult malaria infection from 90% of the adult population to below 10%.
It also invested heavily in primary school programs in Mozal. The project lifecycle of BHP Billiton’s aluminium smelter was in the order of 50 years. Investing in primary school education would provide BHP Billiton with a better educated second generation workforce.
Many mining companies in Australia make substantial contributions towards economic and community development in remote Indigenous communities where they do business.
But this is not just about corporate social responsibility, doing the right thing or even providing something in return for access to land. It’s also a business imperative.
What I say to companies who are involved in or planning major projects in remote Northern Australia is this – What are you doing about ensuring you have an educated local talent pool in 10, 15 or 20 years? If the local schools are not producing people you can hire, what are you doing to address this problem? Have you engaged with community leaders and parents about how you can help the community establish schools or remedial schooling to educate the population?
You need to be thinking decades ahead and looking at the needs of a project through its lifecycle. Today’s children are tomorrow’s workforce. And many children in the areas you are going to be doing business in are not getting educated in the way you will need your future workforce to be.
If governments are serious about Northern Australian development, they won’t build a new bureaucracy; they’ll ensure that every child in remote Indigenous communities gets a proper education and insist that every adult gets a job.
Governments hold the key here because governments provide the welfare and governments run and fund the schools. But the private sector can make a difference too and it is in their business interests to do so. They don’t need government’s permission.
There’s no shortage of human capital potential in Northern Australia. There is no reason why Northern Australia can’t have economic growth like other tropical economies.
I’m glad that the Australian Government is focussed on Northern Development. I see this as an enormous opportunity to not only develop Australia’s tropical economies but also to enable Indigenous Australians to be full participants in the real economy.