Australia adapts to succeed

Compared with much of the rest of the world, Australia’s economy is booming. Louise Whitson investigates the challenges facing employers in Australia and those managing international assignments to the region, with contributions from those on the ground.

Compared with much of the rest of the world, Australia’s economy is booming. Louise Whitson investigates the challenges facing employers in Australia and those managing international assignments to the region, with contributions from those on the ground.The relocation scene ‘down under’ is thriving. Respondents to Cartus’s 2012 Trends in Global Relocation survey ranked Australia at number six in the top 10 global destinations, and the country also took sixth place in the list of the top 10 new destinations to which oganisations had been sending assignees since 2010.

Intra-country moves are also on the increase; Australia was at number four on the list of countries to which respondents’ organisations had experienced the greatest growth in intra-country moves over the past two years.

For 4 per cent of respondents to Brookfield Global Relocation Services’ 2012 Global Relocation Trends Survey report, Australia was the top destination, possibly because of its relative insulation from the types of economic troubles experienced in the US and Europe, as well as its mining resources. Australia also figured on the list of primary emerging destinations, with China, Brazil and India.

The reason for all this activity may well be that, in comparison with much of the rest of the world, Australia is booming. Its economy, which some commentators had predicted might be affected by global economic woes and reduced demand for commodities, grew by 1.3 per cent in the first three months of 2012 – considerably more than the 0.5 per cent that had been predicted.

However, on the ground in Australia, business people see the economy as stable, rather than booming. There is still plenty of talk about how things could get worse and not being over the worst yet, while appreciating that things are really quite good compared with the UK.Key industries: balance shifting

Historically, mining has always been a major contributor to Australia’s economy. Many different minerals and ores are mined throughout the country. With its vast recoverable mineral and energy resources, including coal, copper, zinc, gold, silver, lead, nickel, tin, bauxite, uranium, industrial minerals, oil and gas, Queensland is a global hub for mining, engineering and manufacturing, and one of the world’s key locations for mining supply chains and head offices.

During recent years, the mining sector has been the main contributor to Australia’s economic success, while other parts of the economy have performed far less strongly. However, the latest GDP statistics suggest that this may be changing.

Sectors like professional, scientific and technical services, finance and insurance, it seems, now contribute as much as mining to total economic growth – encouraging news for the country in general, and particularly for those who feared that economic success which relied so heavily on a single sector might not be sustainable.

The Australian government believes that attracting new investment in mining may become more challenging, owing to falling prices for coal, iron ore, and other commodities.

Increased capacity and new technology will be needed to retain the revenue stream. BHP Billiton recently scaled back its plans for expansion of the Olympic Dam copper and uranium mine and said it would not approve any new projects until mid-2013 at the earliest.

Analysts are warning of continued threats to Australia’s economy from global economic uncertainties. Areas of concern include the slowdown of growth in China, one of Australia’s largest export markets. Current problems in Europe are another source of unease. The Reserve Bank of Australia, fearing the risk posed to growth by the Eurozone‘s worsening sovereign-debt crisis, recently cut interest rates for the second time in two months.

Impact of carbon pricing

The recent introduction of new carbon-pricing measures has had a mixed reception, not least because of the impact some believe it will have on prices and employment in some sectors, including mining. The Clean Energy Bill, which took effect in July, targets Australia’s top 500 emitters of carbon (25,000 tonnes or more) – which, it is argued, can afford to make the investment necessary to reduce carbon creation.

Opposition climate action spokesperson Greg Hunt says that, while action on greenhouse gases is needed, the carbon tax will “hurt” families and small businesses by generating price rises, and make Australia less competitive in the global market. Jobs and investment, he believes, will simply move overseas, for no environmental gain.

Aware of possible negative impacts, the Australian government has increased the income-tax threshold for individuals, to compensate for price increases. It is also taking steps to support jobs and ensure continued global competitiveness during the country’s transition to using clean energy, through the new Jobs and Competitiveness Program, which will support local jobs and production, and encourage industry to invest in cleaner technologies.

Expats returning

The latest figures from the Australian Bureau of Statistics (ABS) show that Australia’s seasonally-adjusted unemployment rate was just 5.2 per cent in July. The number of people employed increased by 14,000 to 11,512,600 over the month. Those unemployed decreased by 2,500, to 635,100.

In the Economist Intelligence Unit’s latest liveability rankings, which score 140 cities from 0 to 100 on 30 factors spread across five areas – stability, healthcare, culture and environment, education, and infrastructure – Australia turned in a strong performance. Melbourne took the top spot for the second year in a row. Three other Australian cities were in the top 10. Adelaide rose from ninth to equal fifth place, Sydney was at number seven, and Perth at number nine.

With its combination of employment opportunities and lifestyle, it’s not surprising that Australia is the country that currently hosts the highest number of British expats, according to the latest NatWest International Personal Banking Quality of Life Index. Over the past five years, Australia has also emerged as the top destination for British expats to move to, with 188,000 Brits emigrating there.

Track Me Back is an online jobs resource that links expat workers in the UK with firms in Australia and New Zealand.

Its recent survey found that many expats were returning home for better job opportunities, and because they were disenchanted with current economic conditions in the UK.

The top sectors for returning expats, it seems, are mining, resources, engineering, energy, digital media, healthcare, pharmaceuticals, trades, construction, and insurance.

“When it comes to job opportunities, companies still need to get the right fit. However, clients are moving slowly when there is a vacancy, sometimes procrastinating and making more calculations before hiring,” says Rick Cross, of Jones TalentID, a Melbourne-based boutique recruitment agency working in the professional practice and accountancy sphere. “Accountants and professional services are still in demand. Employers also have to take into account superannuation, which is compulsory. Employers must pay 9 per cent of annual salary into superannuation, even for temporary workers.”

Mr Cross adds that it is fairly easy to get settled in Australia at the moment, thanks to plentiful rented accommodation and low house prices.

The HR perspective

Deborah de Cerff, managing director of Melbourne-based global-mobility and HR consultancy DBS International, and founder of a knowledge-sharing community of Australian global-mobility practitioners called The Relocation Network (www.relocationnetwork.com.au), explains that HR professionals are finding creative new ways of managing, and administering, global mobility.

“Unstable economic climates, stricter government and immigration regulations, increased competition for key talent, and expansion into new and emerging markets are just some of the mobility challenges facing Australia’s HR community today,” she explains.

“Combining these challenges with a greater focus on cost control has meant that companies have needed to find innovative ways to manage and administer their global-mobility programmes. The result is that those responsible for managing their organisations’ mobile workforce are striving to implement a more strategic approach to global mobility, and to develop strategic business partnerships that can help them achieve their short- and long-term goals."

The past 18 months, says Ms de Cerff, have seen a gradual increase in the number of global-mobility specialists recruited. Historically, these roles have either been performed as a subset of the broader HR function or a compensation and benefits job role, or delegated to trainees or administrators supported by outsourced vendors.

As in other parts of the world, outsourced specialist support is becoming more common, as an increased number of niche organisations enter the market, offering high-touch, specialist services focused on specific industry disciplines. There is a growing shift to appoint multiple mobility vendors to support an organisation’s mobile workforce.

Challenges for managers and relocatees

When it came to locations presenting the greatest assignment difficulties for programme managers, Australia was named by 2 per cent of of respondents to the Brookfield survey.

It was also identified by 3 per cent of respondents as the location that presented the greatest assignment difficulties for international assignees – a change from 2011, when it did not appear at all. Some of the challenges noted were the visa process, taxes and benefits, cultural differences, and the cost of living.

When planning a relocation to Australia, advises Fragomen’s Karen Daly, managers should take into account that, in certain circumstances, assignees and their families may be required to undertake health examinations by a government-approved radiologist or physician. Says Ms Daly, “It is important to discuss this requirement early in the process, as assignees may have to travel some distance to complete the examinations, and clinics are often booked out several weeks in advance. In addition, holders of the 457 visa [the temporary business category] must hold health insurance throughout their stay in Australia, unless an exemption applies.” See p41 for further advice on immigration issues.

Kathy Nunn, of destination services provider Elite Executive Services, is a firm believer in the value of giving new assignees an orientation tour. “More companies sending assignees to Australia are looking at the value of preassignment orientation. Sending someone from Europe, with the length of the journey and the cost of the flights, can be daunting, but a familiarisation trip or orientation can nip issues in the bud, setting the relocation on a firm footing from the outset.”

Ms Nunn points out that a good relocation consultant will use the orientation time to guide an assignee through the minefield of education systems and the plethora of school options, so that education opportunities are not lost by waiting until the family arrives. School places are not always easy to find, and seeking them out is one of the major distractions for any new assignee arriving with children.

Orientation, says Ms Nunn, provides a first-hand insight into culture, suburbs, schools, and homes, with invaluable advice and local knowledge, providing a forum for any final issues to be resolved and anxieties minimised. The rental market in Australia can be tough, and homes explored on the internet can be deceiving; it is much better to have a clear idea of rental budget prior to arrival, so that certain suburbs can be targeted, and others avoided. The orientation also gives the opportunity to speak with bank managers, tax advisers, recruitment consultants, and the many other professionals who can answer important questions, saving time and confusion at the start of the assignment.

Counting the cost of mobility

According to Tim Cradock, general manager of international, migrant and multicultural banking at the Commonwealth Bank of Australia, whose global-mobility team assists UK-based staff moving to Australia, there are a number of financial aspects for both employer and employee to consider when a relocation is planned.

“Ensure the business provides a reasonable settling-in allowance for the individual, says Mr Cradock. “This is to cover incidentals, as well as closing off plans in the UK, such as their phone contract, and setting up in Australia.

“Ensure pay is fair by benchmarking it to the Australian market, and see that the employee receives a home and host tax briefing with the company’s tax provider. This is to assess the employee’s tax position and whether any tax-filing obligations in the home location are still required.” See also our update on changes to the Living Away From Home Allowance (p42).

For relocating employees and their families, Mr Cradock emphasises the importance of being au fait with the cost of living in Australia. He advises that they research the rental market in their new location, to see if they are able to afford to live there. Renting in Sydney, he says, is expensive in comparison with most countries.

Mr Cradock goes on, “If you intend to purchase a home in Australia, most residents recommend renting first. This allows you to become familiar with the often-diverse individual communities in and around a city, and to make a more educated decision about long-term housing. Sydney, for example, is divided into hundreds of suburbs.

“Schooling in Australia is divided into private and public. Private schooling can be quite expensive, and is also religion-affiliated. Eating out, grocery shopping, and clothing (including children’s) can also be expensive, so it is important to be clear about the cost of living.”

Relocation costs, Mr Cradock says, can be high – running into the tens of thousands when moving from the UK to Australia, especially if there is no assistance provided by the employer. For advice on tax issues, see box.

As we went to press, news broke that Australia’s rate of economic growth slowed in the second quarter of 2012, thanks to a combination of falling global demand for its resources and cautious domestic consumption – the result of subdued consumer confidence. We wait to see what the future holds in store.
© 2012. This article first appeared in the autumn 2012 edition of Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.

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