Fat wages threaten AUD$200 billion in mining and energy projects

High wages and a shortage of skilled workers in Australia threaten AUD$200 billion in mining and energy projects according to the founder of engineering company WorleyParsons.

John Grill, the founder and current chairman of WorleyParsons, told ABC's Inside Business on Tuesday that wages in Australia had reached exorbitant levels due to a shortage of skilled workers, and that this could undermine the country's competitiveness.

Grill noted that Australian engineers were paid 50% more than their counterparts around the globe, and that the country currently suffers from a dearth of skilled tradespeople including boilermakers, welders, fitters and electrical and instrumentation specialists.

He also endorsed a recent claim by the president of BP Australasia Paul Waterman that $200 billion in mining and energy projects are threatened by Australia's adverse operating conditions.

Despite the higher costs of operating in an OECD country, Australia still appeals as a mining investment destination due to stability and low political risk. Grill believes, however, that if high labor costs continue investment money may switch to less reliable though cheaper developing nations.

Grill points out that the high cost of the Australian dollar in tandem with lofty wages for local hires could severely undercut the country's competitiveness and investment appeal.

"There's two factors here – one's the cost of the Australian workers in Australian dollars and the second is the exchange rate," said Grill.

An analysis published in September indicated that up to $100 billion in major mining projects in Australia had been shelved or delayed due to high operating costs and inclement economic conditions.