TasFarmers Matters - Building boom’s big threat

Tasmanian agriculture is facing a period of real opportunity, with strong growth and ongoing demand for labour.

But with the Hobart stadium and Marinus projects set to begin shortly, attracting and retaining workers to traditional farming roles will become more difficult.

The sector will be competing directly with these large-scale projects, which are driven by significant budgets and are often able to attract workers away from other sectors due to higher rates of pay.

We’ve seen this before. Between 2006 and 2012, the mining boom placed significant pressure on the national labour market.

Demand from China for iron ore, coal and liquefied natural gas drove up wages and pulled skilled workers into the resources sector.

Mechanics and machine operators followed the money, leaving gaps across local industries.

Labour shortages became widespread.

Fly-in, fly-out work surged, and wage growth lifted across the board, putting pressure on tourism, manufacturing and other sectors.

The impact was broad enough to define what became known as a “two-speed economy”.

Tasmania now faces the potential for a similar set of labour pressures.

The question for the government is how to support agriculture and other local employers when competition intensifies.

Major infrastructure projects have a track record of paying above market rates. Without a clear plan, that pressure will be felt well beyond the construction sites.

What we have is a recipe for local cost inflation and a tightening of workforce availability, not driven by real consumer consumption but artificial short-medium term economic stimulation, that will only serve to squeeze agriculture further when margins are already tight, and fuel, fertiliser, and other inputs are only increasing. 

The pattern will likely start with wage spikes across machine operators, truck drivers, tradies, and general labourers.

With a tighter labour supply and rising wages, contractor costs will lift accordingly.

That pressure will drive the need to supplement the local workforce with interstate and overseas labour, and that workforce will need the second piece of the puzzle, a surplus of housing and rental supply.

A smart, coordinated approach will be needed to manage the pressure.

That means enabling a fly-in, fly-out workforce, accelerating regional housing builds, DATA supported by agriculture and investment in worker accommodation, and unlocking planning bottlenecks in key regions.

Supported at the last two state elections, the concept of an agriculture career coach will also support attraction and retention of workers within the sector by enabling workers to understand continuing employment and education pathways available to them for a life in the industry.

We hope to see this election commitment funded in the upcoming May Budget.

Without housing, workforce migration and mobility simply won’t work.

To maintain the existing workforce, targeted tax offsets and incentives will be needed to keep people in the system.

Tasmania will need a rapid expansion in labour supply, not just drawing the existing well dry, with a clear plan to reduce wage distortion through practical financial and tax measures.

If nothing is done, Tasmania will not just see a construction boom, but mounting pressure across the real productive base of the economy, with agriculture carrying more than its fair share of the burden.