Is QR a 'college on wheels'?

Has Anna Bligh just made Australia's skills shortage worse? The Queensland Premier and the state's Treasurer Andrew Fraser have been celebrating the Labor government's successful privatisation of QR National, while the conservative opposition continues to protest that the business should have remained government-owned. (Shouldn't that be the other way around?)

But what exactly have they sold? Many analysts were damning of the float before the shares debuted on the ASX marginally above their $2.55 issue price ($2.45 to retail investors), some joking that its large, purportedly inefficient workforce made it akin to a 'Centrelink on wheels'.

There was much speculation from unions and investors (for different reasons, of course) that there would be sweeping job cuts as soon as it was out of government hands.

So what's all this got to do with Australia's skills shortage? Surely laying off hundreds of workers would allow them to follow the money to the gargantuan salaries being earned by fly-in-fly-out workers in the mines?

Perhaps, but that's a short term view of a much longer-term problem according to Richard Denniss, executive director of 'progressive' think-tank, The Australia Institute – a group that he describes as a "group of economists using orthodox research methods to produce non-orthodox results".

He argues that QR National conceals not a 'Centrelink' on wheels so much as a 'training college on wheels'. For decades, says Denniss, government-owned enterprises were instrumental in training generations of skilled tradespeople. When workers finished apprenticeships, some would stay, and some would leave for jobs in the private sector.

Now, a range of privatisations, from power generators and airlines to passenger trains and now QR National, have silently sold off some of the country's best training operations.

This is not the concern of new owners, of course. They've bought companies that they think should be run more efficiently, and making workforce cuts to achieve this is practically written between the lines of the relevant prospectuses.

So who's concern is it? Denniss blames the governments arranging the floats for the training slumps that follow. Fitters and turners learn best in real workshops and on real railway lines, not in technical colleges.

So a float like QR can be seen as the attempt by a state government to socialise for all Australia, the problem of providing the economy with new skilled workers – or, conversely, to stop Queensland tax-payers providing a free stream of skilled workers to the rest of the country.

What is really going to happen at QR is still not clear. To date workers will not be too unhappy – each has received $1000 worth of shares, and QR CEO Lance Hockridge says that he expects to both increase productivity and the size of the workforce.

That's not an unreasonable statement, if two prerequisites are filled.

First, the minerals boom underpinning the company's coal haulage business must continue. While most pundits are little troubled by this thought, Karen Maley pointed out yesterday why there is some doubt over continuing strong commodities demand from our biggest customer, China (Caught in China's inflation cycle, November 25).

Secondly, there's the not unrelated issue of share price. QR National in is need of large-scale capital reinvestment. Raising capital to do this will not be a problem if the share prices stays at the float level, or rises. But not all analysts see this happening. Eureka Report contributor Roger Montgomery, for instance, told the ABC this week that: "Long term share prices tend to track the intrinsic values of companies, and the intrinsic value for QR National is significantly lower in two years' time."

Capital constraints do not suggest a growing workforce, so there is no guarantee that QR National will confound union protests by increasing, rather than cutting jobs.

But then this is straying from Denniss' point. He is not arguing that private firms should carry swollen workforces (and I am not suggesting QR National is) as some kind of training service to the nation.

Rather, governments at the state and federal level need to be more honest, by accounting for the loss of a massive 'training college on wheels', or whatever the privatisation asset is. Only then can the right financial and tax incentives be put in place to make sure the 'college' is maintained, or created somewhere else.

Without that kind of broader thinking, Anna Bligh's government may just have done its part to make our already crippling skills shortage worse. Only time, and the QR share price, will tell.