SYMBOLIC as it may seem, but his shovel of the first lumps of iron ore into the hold of the Chinese carrier Heng Shan (Everlasting Mountain) last week, was a dream come true for Andrew “Twiggy” Forrest.
What’s even more important to him is that the event proved many financiers, investors and stock brokers throughout Australia that they were wrong in not believing he could achieve what seemed to be “mission impossible” against the dominance of the nation’s two giant producers BHP Billiton and Rio Tinto.
With the historic first shipment of 18,000 tonnes of high quality “Rocket” iron ore to China, Forrest, 46, is now confirmed as Australia’s richest man with his mining assets worth nearly A$10bil (RM31bil).
He is truly a self-made billionaire, who started with some big failures in mining aspirations and then took the boldest step of his life, a challenging dream, which earned him the reputation of an “iron ore upstart”.
This was the reason why many were dubious of his vision though he did not lack enthusiasm or excitement. Yet they thought his plan would never succeed because of his past failures and the fact that the project needed at least A$4bil (RM12bil) to build.
Where would the money come from?
Forrest didn’t have that much, not even half of it. The Australian corporate, financiers and fund managers refused to provide the seed capital. Stockbrokers simply refused to recommend investing in his Fortescue Metals Group.
Only small investors were prepared to buy the shares in the hope that the project would somehow take off. But the tiny support was not enough to kick-off the big project.
The solidly built former jackeroo (apprentice cattle-station hand) and later a stock-broker never gave up his dream even when the hurdles seemed insurmountable. He was determined and persevered in its pursuit despite the scepticism and doubts.
Forrest, blessed with a charming personality and ability to speak impressively, flew to meet overseas investors in the United States, Europe and China and raised A$4.1bil (RM12bil) to build a new port and railway system to the remote Pilbara mine site.
When it became operational last week after several cost blow-outs, legal action and the deaths of three workers on the mine site, he mused: “(And) after nearly 10mil man-hours, 200 permits, 13,000 engineering drawings, 330 contracts, 24,000 invoices, megawatts of passion and toil with buckets of sweat, stage one of our project is almost complete.
“A vanguard of industry juniors has been further energised by our example. Steel mills across Asia and the workforces of the Pilbara welcome a major new low-cost supplier and a high-quality alternative employer.
“Australia now has a new flagship company that is proudly waving that flag.”
Forrest described the event as the culmination of an extraordinary achievement by some 12,000 people who had worked hard on the Fortescue’s project since its inception in April 2003.
The ceremony was watched by fellow billionaires James Packer and Kerry Stokes who, though had no interest in the company, flew in their respective private jets with their wives to the new port at Port Hedland, 1,734km north-west of Perth to congratulate Forrest.
Production in the first stage will increase to 25,000 tonnes of iron ore this year with double that amount next year.
Proceeds from the first 5,000 tonnes of iron ore will be directed to aid China’s earthquake victims. He has also pledged to contribute A$1mil (RM3mil) to build a women’s refuge, a children’s safe house and a men’s shed for training Aborigines in the Pilbara in woodwork and crafts.
Forrest’s first recruitment in the project was a former employee of Rio Tinto, Graeme Rowley, whom he convinced about his vision. Rowley invested nearly all his savings of A$80,000 (RM240,000) for a million shares in Fortescue at 0.08c a share. Now it is worth about A$10mil (RM30mil).
They had planned together how to explore, mine the iron ore, build a new railway system to freight the product to Port Hedland and ship it to China from a new port.
Rowley, who has mining, rail and port expertise, was later appointed executive officer of operations.
As the plan got underway and got tougher, Rowley and Forrest recruited Alan Watling, a former colleague in Rio Tinto, as chief operating officer because of his knowledge of rail and shipping operations on mine site.
Rowley believes that Forrest’s strong sense of purpose and experience in financing, which he has learned from his ill-fated role in the Anaconda nickel project, has been pivotal in making Fortescue’s plan a reality.
But Forrest also has a strong discipline in work ethics. His tough rules to the workers are: “Leave nothing until tomorrow. Don’t go home with jobs still on your desk.
“Do your job, that’s what you come to work for – the challenges. When you’ve completed the day’s challenges, go home and come back the next day and do a new lot.
“Use your brain before you use the dollar. Think outside the box.”
And Forrest never forgets his dedicated workers. After the ceremony last week he went back to the mine site with cartons of beer to celebrate with them the first loading of shipment.
Australia is to take a 60-year record high of skilled migrants as part of its fight against inflationary pressures.
WITH an eye on the current world economic and financial turbulence that could possibly get worse with the slowdown of Japan’s economy, the six-month-old Rudd government’s first Budget is aimed at building a buffer against adverse effects in these challenging times.
Mildly painful for the rich who will lose their baby bonus and tax benefits for stay-at-home wealthy mums, but fairly helpful for working families who will receive tax cuts and rebates for child care, the document warns that the slow growth in the international economy is affecting many countries, including Australia.
What is of particular concern to Federal Treasurer Wayne Swan, who brought down the Budget in Federal Parliament late last Tuesday, are the escalating prices of Australia’s exports at a time when domestic inflationary pressures are already high.
On the other hand, robust growth in the emerging economies, particularly China and India, is expected to drive further big rises in terms of Australia’s trade, exasperating income and price pressures.
This would lift Australia’s normal economic growth to 9¼% next year - the biggest increase in a generation. But the productivity growth over the last five years has averaged 1.4% a year – the lowest in 17 years.
Swan places the blame squarely on capacity constraints, which have put upward pressures on inflation.
Hence his weapons to fight inflation, which is now 4.2%, are to cut spending by A$7bil next year with a total of A$33bil over four years, and increase the intake of skilled migrants to a record level of 30% more than the previous years.
This means that 133,500 of the total intake of 190,300 for next year will be skilled migrants – the biggest influx of this category in 60 years – while the government will inject A$1.9bil over the next five years to provide up to 630,000 additional training places for local youths to fill the skills shortage.
Can Australia handle such a big number of foreign skilled migrants in view of the possible increase of unemployment rate due to the recent series of interest rate hikes?
Swan looked cool, confident and comfortable as he answered the question.
“Australia still has a big labour shortage, especially skill shortages,” he said categorically.
“That is one of the reasons there is so much emphasis in this Budget on expanding the productivity capacity of the economy, on investing in skills and education and on investing in infrastructure.
“If we don’t attend to these things in the longer term, we’ll also have higher inflation and higher interest rates.”
His Budget, reflecting most of Labour’s election promises, is designed to meet the uncertainties of the future from what he describes as “a position of strength”. It also opens a new era of strategic investment in Australia’s future challenges and opportunities.
Setting A$40bil in reserve for building a modern Australia, it will boost infrastructure, such as the world’s fastest telecommunication networks, digital education revolution, doubling post-graduate awards for PhDs and Masters, and increased funding for research and innovation.
The Budget also provides funds to put Australia in top gear on moving into climate change. This includes A$2.3bil to help reduce greenhouse emissions and to ensure that Australia will show global leadership in the transition to a low emissions economy.
Australia will also spend A$1.15bil to develop clean coal technology, renewable energy and energy innovation.
Working families will also be assisted to reduce household emissions with a range of initiatives, including what is known as the Green Loan Programme, costing A$300mil over five years.
To support the establishment of a financial hub in the Asia-Pacific region, the government will significantly reduce withholding tax of 30% to a flat 7.5% for non-resident investors.
There will also be a comprehensive review of the tax system to make it fairer and simpler and to create incentives to invest in Australia’s productive capacity.
On defence, the government has committed to provide 3% real growth annually until the 2015-16 financial year. On current projection, defence spending is expected to be A$6bil more in 2011-12 than the allocation in the 2007-08 financial year.
It will also increase by A$500mil to A$3.7bil for overseas aids to alleviate poverty and build security measures in the region.
Surprisingly, despite these extra funding for building a modern Australia, the Budget forecasts a surplus of A$21.7bil next year – the biggest in nearly a decade. Over four years, the surplus is expected to be a massive A$79bil.
THE acuteness of Australia’s shortage of workers is far greater than is generally realised.
So much so, there is a strong possibility that the federal government will consider an employer push for creating a “guest worker” scheme to bring in from overseas unskilled workers.
Already, visitors from various countries, including foreign students, are now allowed to change their visa on shore to “temporary residents” to ease the shortage in the hospitality industry, especially in restaurants and cafes.
In a new comprehensive paper published in the latest issue of the Academy of Social Sciences, Prof Peter McDonald, director of Demographic and Social Research Institute of the Australian National University, and Glen Withers, chief executive officer of Universities Australia, called on the government to establish an independent inquiry to determine the best planning and policy role of immigration to meet future needs in the labour force.
McDonald, who is also president–elect (2010-2013) of the International Union for the Scientific Study of Population, is often consulted on the issue of population futures, and particularly causes, consequences and policies, by governments around the world.
Withers, who is also a consultant and adviser with extensive experience, has been awarded the Order of Australia for his services to applied economics, including the development of the Australian immigration point system.
They pointed out that the continuing strong demands for Australian resources from China, India and other Asian countries will further intensify the current shortage of workers.
Annual growth of the Australian labour force, which has fallen from an average of 1.9% three years ago to currently 1.2%, will drop even further to 0.7% by 2021 and less than 0.5% by 2051.
In the next 20 years, the only way of increasing labour supply is to step up the annual intake of migrants.
To maintain and sustain the labour force at 1.0% a year at least, the net number of migrants to Australia would have to be 227,000 by 2021.
So far, the annual migrant intake has remained at around 144,000 a year with the record highest of 177,600 in the financial year ended last June.
McDonald and Withers urged the government to provide a long-term skill requirement plan based on high quality demographic-economic modelling and industry and state governments’ assessments of emerging industrial needs.
This means that the plan should provide aspirational targeting for education and training policies with regular annual updates.
The two experts also want to know what measures will be taken to ensure that Australian social and economic institutions can adapt to the bigger number of migrants and what skill levels and skill types will be needed to meet future labour requirements.
More importantly, they would like attention to be directed towards the issue of integration although the attitudes of the mainstream community are now much more positive towards immigration.
As a positive strategy, the experts believe that it will continue to be important to recruit skilled migrants so that they will merge smoothly into the Australian labour market.
And, although the experts realised the need for unskilled foreign workers, they expressed caution because the current attitude to such migrants could change if, for some reasons, they remained unemployed for a long period of time.
Quite rightly, they believe that immigration will always be a target for criticism while some Australians, who are economically disadvantaged, remain in the same status.
In this respect, they recommend that immigration should not continue to be expanded unless the public can be assured that all best-practice efforts are being adopted.
This is to ensure that all local residents seeking work, education and training will not be disadvantaged by a focus on new overseas workers as a solution to the shortage of workers.
They see as sensible, worthy and justified for a “guest worker” scheme for the lower skilled workers, especially from the South Pacific islands and Timor Leste in view of Australia’s interests and responsibilities to the islanders.
Currently, however, there is an acute shortage of workers in the hospitality, transport and primary industries that could lead to the extent of lowering the standard of the skill categories.
This is because hotels, transport companies and the rural farms, which will eventually become corporatised, are also facing significant difficulties in employing all levels of workers, whether they are skilled, semi-skilled or unskilled.
They include labourers, cleaners, farm hands, service workers, truck and forklift drivers, machine operators and supervisors.
And they also urged that strict limits be placed on the entry of general unskilled workers whether on a temporary or permanent basis. They are concerned that, without proper planning, the recruitment of low or unskilled migrant workers could create a “second-class” group who will have lower entitlements and lower wages than the workforce generally.
“Such a result could be seen as ‘un-Australian’ and might undermine support for immigration ...” they claimed.
“It would also keep some Australian industries from moving to higher value-added production, discouraging better management practices and adoption of new technology, limiting productivity growth.”
Without referring to Prime Minister Kevin Rudd’s aspirations to build a modern Australia, McDonald and Withers declared that their recommendations represent a major challenge to the “designers of modern Australian immigration policy”.
A NEW controversy over the botched terror arrest of Indian doctor Mohamed Haneef has emerged, with more questions on the procedure of a long-awaited inquiry to find out the truth in what has been described as “arguably monumental stuff up, possibly even an abuse of power” by the former Howard government.
Questions being raised include whether the people involved in the saga will really give their full and frank cooperation to the judicial inquiry even if it risks their reputation or their jobs without the powers to compel them to do so.
Dr Haneef’s legal team is definitely sceptical about it, and wants retired Sydney Supreme Court judge John Clarke QC, who is conducting the inquiry, to seek coercive powers to get to the bottom of the case.
But Clarke believes he does not need such powers because the relevant parties have assured they would provide all relevant witnesses, documents and information.
The controversy lingers on, however, and questions are raised not only by Dr Haneef’s lawyers but also by Queensland Law Society president Megan Mohan. Both are expressing doubts and concerns over the inquiry’s outcome.
For example, can Clarke force Australian Federal Police (AFP) chief Mick Keelty for further details on the bungled investigations if he refuses to go beyond “a brief and self-serving statement” to the inquiry?
Or can Clarke force former Immigration Minister Kevin Andrews to give details of the advice he received and his true reason for cancelling Dr Haneef’s visa if he also refuses to talk about it?
These questions have become imperative in view of a leaked report to The Australian newspaper even before the inquiry’s preliminary hearing began in Canberra last Wednesday.
The report says it is believed that Andrews would tell the inquiry he had made the decision to revoke Dr Haneef’s visa without knowing anything about evidence apparently held by the AFP that would have suggested the doctor’s innocence.
Keelty refused to comment on the report but he said “no” when asked if he had withheld information from Andrews. They have both been given privileges to testify without cross-examinations behind closed doors.
In such circumstances, Rod Hodgson, one of Dr Haneef’s lawyers, believes that Clarke’s hands “are tied behind his back”. Mahon, on the other hand, points out that unless the inquiry has all the information needed to get to the truth of the matter, every witness before it would have some sort of protection against self-incrimination and defamation.
Clarke’s rejection of the lawyers’ demand to cross-examine the witnesses, which may have something to do with restricting certain information of national security, is hardly convincing to the legal fraternity who criticised that he has insufficient powers to conduct a credible inquiry.
Questions of credibility
Why, if Federal Attorney-General Robert McLelland was serious enough to bring all the facts to light, had he not given Clarke “the kind of coercive judicial powers that would guarantee the kind of outcome he professed to want”?
When asked this question in a television interview, he replied that the powers of compellability were not necessary because of the assurance Clarke had received from those involved in the case. But he left the door open for Clarke to extend his powers if he found that he did not receive full cooperation.
Dr Haneef, 27, who worked at the Gold Coast Hospital in Queensland, was arrested on July 2 last year in connection with two failed terrorist car bombings in Britain as he was about to fly to Bangalore to see his wife and their newborn daughter.
He was the first man to be detained under the 2005 Australian Anti-Terrorism Act for 12 days and eventually charged with recklessly supporting a terrorist organisation by giving his mobile phone SIM card to his second cousin Sabeel Ahmad, also a doctor in Britain, who was allegedly linked to the terrorist plot.
This charge failed but Dr Haneef was detained a further 18 days before his visa was revoked on supposedly character background that led to his return to India.
The investigations, which the AFP claimed are still continuing, have cost so far more than A$7.5mil. About 600 security officials are involved in the case.
But the events that followed were surrounded with confusion, surprises and even a public outcry of injustice.
Firstly, the case against Dr Haneef would have failed because a British court had ruled that there was no evidence of his cousin being an extremist or involved in an extremist organisation.
Secondly, the SIM card Dr Haneef gave to his cousin was found in Liverpool where he had stayed before leaving Britain to work in Australia, not at the scene of failed car bombings at Glasgow airport on June 30 last year.
Thirdly, government officials and several agencies, including the police, were taken by surprise when Andrews, who was cautioned to consider several options carefully, suddenly announced he was cancelling Dr Haneef’s visa after he was cleared of the case against him.
Clarke hopes to receive all the submissions by May 16 and write his report to the Rudd government by the end of September.