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Politics over policy in industrial relations

By Alex Philipatos - posted Wednesday, 29 May 2013

The Coalition's industrial relations plan is a triumph of politics over policy, of timidity over reform. Tony Abbott's proposals fall far short of what is needed to assist businesses become more flexible and adaptable to market conditions and create jobs for the unemployed. Instead, the policy is an attempt to limit political attacks from a Labor Party itching for a fight over industrial relations, and to reassure voters once again that Work Choices is 'dead, buried, and cremated.'

While it may be smart politics to avoid hot button issues such as unfair dismissal laws, individual contracts, and the safety net – which were the contentious elements of the Work Choices package – there are other important areas for reform not central to the Work Choices backlash.

The negotiation of greenfields agreements has become a long and costly affair since the introduction of the Fair Work Act. John Howard's Work Choices allowed for employer-only greenfields agreements, which allowed employers to determine wages and conditions (above the safety net, of course) for new projects. These agreements have since been scrapped; under the Fair Work Act, greenfields agreements must be negotiated with the industry's default union.


Mining companies are now left with no choice but to negotiate with unions like the notoriously belligerent CFMEU. With no other options or checks on union monopoly, unions have been able to create long delays, inflict large losses in forgone revenue, and prevent workers from starting their jobs. Employers are increasingly subject to protracted negotiations over wages and conditions, costing millions of dollars even before a worker has set foot on the site.

According to the Australian Coal Association's annual budget submission, the average Australian thermal coal project is delayed 3.1 years compared to the world average of 1.8 years, and increasing by a further three to four months per year. This means thermal coal projects in Australia are delayed an additional 1.3 years compared to other coal producing countries. Of course, these delays are not solely due to industrial relations laws, with the submission also citing government regulation, particularly environmental regulation, as another cause for delay. A one-month delay in commissioning a large open-cut mine can cost $10 million in lost revenue, which is not only a massive waste but also a lost employment opportunity.

Employers should be able to determine wages and conditions for new projects. It simply does not make sense that unions must be involved in every new greenfields agreements. This is out of step with an economy where less than one in five workers is a union member.

But if employers were given greater autonomy to set wages and conditions, will they lower wages and scrap valuable conditions? Far from it.

All enterprise agreements must comply with the relevant industry award as well as the Fair Work Act's 10 National Employment Standards. Australia's safety net of minimum wages and conditions is one of the world's highest. In 2011 our federal minimum wage was ranked fifth highest among OECD nations. Awards then build higher and higher minimum wages on top of that generous minimum.

In any case, most employers organising greenfields agreements are offering wages and conditions far in excess of the legal minimums. This is not because of unions; it's not because of the law; and it's not even because the employer is generous. It is because in a competitive market, employers must offer competitive wages. There is competition for workers just as there is competition for jobs. Workers' skills are valuable and employers must offer them at least the market rate, or the employee can go to an employer who will.


Employer-only greenfields agreements were not the contentious parts of the Work Choices reforms. They may have angered the union movement, who obviously would prefer to be placed front and centre in negotiations, but they were not an issue for the public at large. The public were interested in the changes to unfair dismissal laws and the level of the safety net.

Coalition policy should bring back these agreements to ensure projects aren't needlessly delayed, millions of dollars aren't whittled away, and workers aren't prevented from earning an income.

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About the Author

Alex Philipatos is policy analyst at the Centre for Independent Studies.

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All articles by Alex Philipatos

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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