Miners drowning in their own rules
30 October 2014: Australia’s mining sector is in danger of becoming a victim of its own rules.
In a new report, Get out of your own way: Unleashing productivity, the fourth edition of its Building the Lucky Country series, Deloitte has calculated the cost of rules and regulations at $250 billion annually across the private and public sectors.
That cost comes in two parts:
- $95 billion – the cost of administering and complying with public sector regulations
- $155 billion – the matching cost of administering and complying with the rules that organisations choose to impose on themselves.
The chart below shows that almost one in every ten workers in the mining sector is in a compliance role – and that the share of compliance workers within overall mining sector employment is growing faster than in any other industry.
According to Deloitte National Leader Energy and Resources, Michael Rath: “Particularly with the mining industry moving from construction to operational phases, there have been huge increases in the relative size of the compliance workforce in Australia’s mining sector.
“Mining jobs leapt in recent years and, given the pace of this growth, it says something that the number of compliance jobs within the sector was growing even faster still.
“This has, of course, generated benefits, particularly on the safety front. But as much as miners have good reason to complain about the impact on them of government regulations, the good profits evident over much of the last decade lulled many in the sector into a false sense of security, and we imposed on ourselves many new rules across HR, IT, finance, marketing, legal and governance processes.
“These have come at an enormous cost, and it isn’t clear that they were worth it.”
Compliance workers – share of total workforce, and the speed of increase in that share
The higher a sector is on the chart, the larger the share of compliance occupations in its total workforce. The further to the right on the chart, the faster the growth in the share of compliance occupations. Bubble size reflects the size of the sector in terms of output.
Source: Deloitte Access Economics analysis of Census and labour force data
Examples of some of the ‘dumb’ rules which the sector has imposed on itself include:
- Fly-in-fly-out rosters that are ineffective and unproductive
- No work on fly-in days, regardless of the distance travelled or the mode of transport
- Mines where OH&S managers fill in different reports for each contractor and subcontractors, rather than simply preparing a common report
- Safety gear and safety inductions for people who are only attending meetings in site offices – the same rule applies for an office visit as for a full onsite mine operations visit.
- Safety tool box talks required at every shift start, regardless of risk or work area worked
- Mine sites that grind to a halt when an incident occurs as the medical response team isn’t allowed to attend to another incident should one occur. This is even required where mines are next to each other and medical teams can be shared
Deloitte has taken a dose of its own medicine, asking its employees to identify ‘dumb rules’ that get in the way of innovation, collaboration and creativity.
“Every few years over the past decade we have asked our people ‘What are the dumb things we do? What is stopping you doing your job?’ and each time we identify a disappointing level of unnecessary rules,” said Michael Rath.
“We only did this earlier this month, for the fourth time, and while we are still finding rules that slow us down, Deloitte is a better business for running these ‘dumb things’ initiatives and listening to and trusting our people.”
According to report co-author, Deloitte Access Economics’ Chris Richardson, both the public and private sectors can benefit from a new approach to managing risk.
“Where rules don’t exist, we create them. Where they already do, we make more. They overlap, they contradict, they eat our time and they weigh us down,” he said.
“We’ve created a ‘compliance sector’ that employs three times more people than mining. Taking a long, hard look at the rules that individual organisations operate within will reduce the cost and complexity of doing business in Australia.”
Michael Rath said: Governments can do a lot to streamline the regulatory environment, but there is a bigger opportunity – and need – for business to slash the red tape it imposes on itself and improve productivity and innovation.”
Note: Separate media releases cover the red tape challenges from national, state, private business and other industry sector perspectives.
The report and an associated infographic are available on request.
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