Dris proposal for national licensing of the electrical occupations

Attachment B – Overview of the electrical industry sector

Electrical services industry

The electrical services industry is the largest contracting trade of the building and construction sector. The industry is expected to generate revenue totalling $11.5 billion in 2011–12, a 2.2 per cent rise from the previous year, including value-added of $5.75 billion or about 0.5 per cent of Australia’s GDP. The industry’s medium- to long-term performance has been boosted by work resulting from the emergence of new technologies, particularly broadband communications cabling. The industry comprises many small-scale operators employing four to five people per establishment on average, including working proprietors and partners. The industry is forecast to record cyclical growth averaging 3 per cent per annum over the next five years to reach $13.4 billion in 2016–17, just behind the pace of GDP growth (3.2 per cent per annum), supported by the solid cyclical expansion in the downstream building markets and the continued spread of electrical and electronic technology.⁵⁰

Those in the electrical services industry provide a range of services, including the maintenance, installation, renovation, upgrade and repair of basic electrical circuitry. This also includes work related to transmission lines, distribution networks, rail traction and cable jointing. The three key services provided by the industry are the maintenance and installation of basic electrical circuitry, upgrading and renovating of existing installations and new building installations, as indicated in Figure B.1.

Figure B.1: Product and services segmentation (2011)


Source: IBIS World Industry Report E4232: Electrical Services in Australia, February 2011.

The industry is subject to key external drivers, for example there is increased demand for inspections of existing electrical installations and additional rewiring and reconstruction activity when buildings and infrastructure are damaged by natural disasters such as Victoria’s Black Saturday bushfires (2009) and the recent Queensland floods (2011).⁵¹ Electrical workers are also in demand in the rapid growth area of fly‐in, fly‐out (FIFO) work arrangements in such areas as the mining and resources sector:⁵²

FIFO is a cost-effective way to address skills shortages and meet workforce needs to increase efficiency. Skills Australia suggests that employment growth in mining operations will increase by 89,004 persons from 2010 to 2016, with annual average growth in employment in mining operations of 7.9 per cent over this period. ⁵³

Electricians feature as one of these escalating employment areas, as shown in at Figure C.2. These arrangements will benefit from the increased labour mobility flowing from national licensing.

Western Australia has indicated that this type of arrangement accounts for nearly 25 per cent of issued licences. Electrical workers need to apply for recognition of their current licence if they reside in another state or territory.

Figure B.2: Skills Australia employment projections for occupations in mining operations⁵⁴

Source: Skills Australia 2011, Employment growth projection in mining operations (less oil and gas), 2010–2016, p. 4.

An emerging trend has been the marketing of electrical repair and installation services by regional providers of electricity, gas and water. In the future, organisations marketing electrical contracting services may emerge as key players in the industry. Also likely is the emergence of more large-scale contractors providing multidisciplined facilities management services (i.e. maintenance of plumbing, electrical, mechanical and air-conditioning assets). This development would correspond with trends in the United States and the United Kingdom, where facility management firms contract across all market segments and enter into long-term arrangements, with large-scale commercial and industrial clients to deliver services across regional and national markets.⁵⁵

Figure B.3 shows the allocation of businesses in the electrical services industry across Australia. This corresponds with the general distribution of population and economic activity.

Figure B.3: Electrical services industry business locations


Source: IBIS World Industry Report E4232: Electrical Services in Australia, February 2012

The electricity supply industry

Distribution

Electricity distribution is the most labour intensive of the electricity industries (which comprise generation, transmission and distribution). This industry is expected to employ 29,613 people and pay wages amounting to $3.0 billion in 2011–12. There are 26 enterprises involved in distributing or retailing electricity.⁵⁶ Electricity distribution involves operating low-voltage power supply systems (consisting of lines, poles, meters and wires).⁵⁷

The industry has a well-established product and a number of well-known industry players. Demand for electricity tends to broadly follow trends in overall economic performance. However, the industry is also undergoing substantial structural change, as competitive reforms are both implemented and extended. Changes have included the splitting of vertically integrated, state government owned electricity monopolies. These businesses have been restructured in terms of function (generation, transmission and distribution) and, in the case of distributors and retailers, regional coverage. Distributors and retailers have also become able to compete for customers outside their traditional or allocated areas. In addition, some distributors and retailers owned by state governments have been privatised.⁵⁸

Both electricity retailers and distributors make use of contract workers as well as employees. Contractors and employees perform a range of tasks, including distribution line maintenance and meter reading.⁵⁹

Transmission

The primary activity of the electricity transmission industry is the bulk transfer of electrical power at high voltages (11 kilovolts or above) from a generator to substations near populated areas. The activities associated with this work include high-voltage electricity transmission, substation operation and transmission of electricity to distribution networks. The industry operates the high-voltage electricity network, linking electricity generators to the distributors that operate the low-voltage electricity supply system. Electricity transmission is a capital-intensive activity and the industry employs only 2,962 people, paying $313.9 million in wages in 2011–12. Only a small number of firms are involved in electricity transmission, and they have an average of two establishments each. The number of firms involved in the industry has remained static since 2006–07, and is expected to be unchanged through 2016–17. Over the next five years, industry revenue is expected to grow 3.1 per cent per year, to $3.69 billion in 2016–17.⁶⁰

Regulation of the electricity transmission industry is tight, due to its importance to the overall economy.

The Australian Energy Regulator (established in July 2005) implements and enforces the rules set down by the Australian Energy Market Commission (AEMC). The AEMC was established to undertake rule making and market development in the national electricity market. It is responsible for administering and publishing the National Electricity Rules; the rule-making process under the National Electricity Law; making determinations on proposed rules; undertaking reviews on its own initiative or as directed by the Ministerial Council on Energy; and providing policy advice to the Ministerial Council on Energy in relation to the national electricity market.⁶¹

Electricity generation

Companies in this industry generate electricity from a variety of energy sources. The electricity generated is transported to end users by electricity transmission and distribution systems. Industry activities also include the following forms of electric power generation: hydro-electric, fossil fuel, solar, tidal, gas, wind and coal.⁶²