Labour and productivity: exploring alternative solutions
A. Drake-Brockman A and D. White ADLA Piper Australia.
The APPEA Journal 52(2) 651-651 https://doi.org/10.1071/AJ11065
Published: 2012
Abstract
A serious skills shortage and increasing wage rates with no apparent increase in productivity is facing Australia’s oil and gas industry. The measures announced in the 2011 – 12 Federal Budget on 10 May do not appear to address the skills shortage crisis and may affect the viability of some projects. This extended abstract proposes some solutions to alleviate the existing skills shortages facing offshore resource projects. It also discusses some of the structural inefficiencies in the Fair Work Act 2009 (Cth) that is contributing to these issues. Under the Regional Sponsored Migration Scheme, the Federal Budget included an increase of skilled migration from 10,000 to 16,000 places in 2011 – 12. This is in contrast to the calls from Western Australia’s resources industry suggesting about 33,000 workers will be needed by the end of this year. The major changes to Australian labour laws brought by the FW Act is said to have resulted in uncertainty about some projects. Evidence of the shift to a collective (enterprise) bargaining framework based on delivering productivity increases is not yet available. An enhanced role for union officials seems to have resulted in an increase in union power and union influence in enterprise bargaining. This may be a reason for wage blow-outs in the oil and gas industry.
Allan Drake-Brockman has particular expertise and interest in enterprise bargaining and industrial litigation, with a focus on strategic industrial relations planning in the energy and resources sector. This includes advising on major infrastructure and resource projects such as Gorgon, Pluto, Kippa Tuna Turrum, Bayu-Undan, Hope Downs 4, Roy Hill, Macarthur Coal (Qld), and Major infrastructure and resources projects. He combines his knowledge of all stakeholders in Australian industrial relations—including unions, employer associations, and professional bodies with his ability to find innovative solutions. He has acted as counsel in major national industrial law cases in various Full Courts and Tribunals. He continues to be recognised in the Doyle’s Guide to the Australian Legal Profession as the pre-eminent Workplace Relations and Employment lawyer in Western Australia. |
Daniel is a solicitor in the Workplace Relations, Employment and Safety team. He has a strong background in industrial relations. He has been working in the field of industrial relations since 2007 and has a particular interest in industrial relations strategy (including enterprise bargaining), union management, employment-related matters, and safety issues about large-scale resource and infrastructure projects. He holds a degree in industrial relations (first-class honours) and an LLB. He was recently accepted into the Masters of Employment and Labour Law at Melbourne University to be completed part-time as a commitment to providing leading advice in his field. He has co-authored a number of articles for leading journals and conferences focused on the topics of enterprise bargaining and union management. |
References
1 ‘Queensland Premier Tells WA Workers to Head East’, ABC Rural (online), 26 October 2011 <http://www.abc.net.au/rural/news/content/201110/s3348505.htm>.2 Penny Williams, ‘Wages threaten projects’, The Australian Financial Review (Sydney), 17 February 2012, 10.
3 Ross Fitzgerald, ‘Unions gain upper hand from Rudd’s workplace reforms’, The Australian (online), 16 January 2010 <http://www.theaustralian.com.au/news/opinion/unions-gain-upper-hand-from-rudds-workplace-reforms/story-e6frg7eo-1225819886519>.
4 Reserve Bank of Australia, Statement by Glen Stevens, Governor: Monetary Policy Decision, 5 July 2011.
5 Department of Education, Employment and Workplace Relations, ‘Skill Shortages Australia’, June 2011, 11.
6 Department of Education, Employment and Workplace Relations, ‘Skill Shortages - Summary’, June 2011.
7 Department of Education, Employment and Workplace Relations, ‘Skill Shortage List 2010–11 Western Australia’, 30 June 2011, 3.
8 Australian Chamber of Commerce and Industry, ‘ACCI Survey of Investor Confidence’, January 2011, 3.
9 National Australia Bank, Quarterly Business Survey — June Quarter 2011, 21 July 2011, 6.
10 Penny Williams, ‘Wages threaten projects’, The Australian Financial Review (Sydney), 17 February 2012, 10.
11 In January 2012, the Minister for Employment and Workplace Relations the Hon Bill Shorten announced a review of the Fair Work Act 2009 (Cth). At the time of writing, the review had not been released.
12 Fair Work Australia is an independent, statutory body with a range of functions and powers: facilitating collective bargaining with unions, approving statutory industrial agreements (such as single enterprise agreements and greenfields agreements), adjusting minimum wages and modern award conditions, dealing with unfair dismissal claims, dealing with industrial action and unions generally, and settling workplace disputes. Fair Work Australia has a much greater role in bargaining and dispute resolution than the former AIRC, including arbitrating enterprise outcomes in some cases.
13 Traditionally, there are competing interests for work on major resource projects between The Australian Workers Union; The Australian Manufacturing Workers Union; The Construction, Forestry, Mining, and Energy Union; and, The Maritime Union of Australia. There are a number of other Unions who also have membership coverage for the type of work that is typically performed on major resource projects but have recently proven to be less industrial active.
14 Under the Workplace Relations (WorkChoices) Amendment Act 2005 (Cth), rights of entry—particularly to hold discussions with employees—required that a union was a party to an industrial instrument that applied to that workplace. That limitation has now been removed.
15 Note there are special qualifying provisions around this right of entry.
16 The union can exercise this type of right of entry only if the union is entitled to represent at least one member who works at the premises and who is affected by the suspected contravention.
17 Note there are special qualifying provisions around this right of entry.
18 Single enterprise agreements are made between an employer and its employees. These can be made between two or more employers and their employees provided that the employers are single-interest employers—meaning that they are related-bodies corporate (see Corporations Act 2001 (Cth)), engaged in a common enterprise or joint venture. A greenfields agreement can be made for both single enterprise agreements and multi-enterprise agreements if it relates to a genuine new enterprise, project, or undertaking and is made prior to the employment of any employees that will be necessary for the normal conduct of the new enterprise. The Fair Work Act 2009 (Cth) does not allow employer-only greenfields agreements. The only greenfields agreements that can be made are those where a union(s) is involved, and that union(s) is entitled to represent the majority interests of employees proposed to be covered by the agreement.
19 See for example the Qantas Dispute Case: Minister for Tertiary Education, Skills, Jobs and Workplace Relations [2011] FWAFB 7444.
20 ‘In-term’ agreement means an agreement covering work on the project that sets out the wages and conditions that apply to employees of a contractor for the term of that agreement, which has not yet expired. Enterprise agreements have a maximum life of four years from the date of approval by Fair Work Australia. Employees may take protected (lawful) industrial action in support of an new agreement in circumstances where the existing enterprise agreement has reached is nominal expiry date.
21 The Full Bench of Fair Work Australia recently held that a union can bypass even the requirement for an MSD and go straight to applying for a Protected Action Ballot Order (PABO). This decision is under appeal to the Federal Court. See: JJ Richards & Sons v Transport Workers’ Union [2011] FWAFB 3377.
22 An increase in working days have been lost due to industrial action in the September 2011 quarter, which is attributed to a number of former Workplace Relations Act 1996 (Cth) workplace agreements reaching their nominal expiry dates. See: Department of Education, Employment and Workplace Relations, ‘Fair Work Act Review Background Paper’, January 2012, 17.
23 Where employees take industrial action other than in accordance with the Fair Work Act 2009 (Cth) requirements, that industrial action is unlawful and affected employers have a number of legal remedies available to sue for the damages. Again, it is acknowledged that any time lost would be costly for the project and must be avoided and minimised.
24 Note the recent decision of the Full Bench of Fair Work Australia that encourages competitive unionism: Shop, Distributive and Allied Employees Association v National Union of Workers [2012] FWAFB 461.
25 Examples: Australian Institute of Maine and Power Engineers v Inco Ships Pty Ltd [2011] FWAFB, The Australian Workers’ Union v Leighton Contractors, Bechtel Australia Pty Limited & Ors [2012] FWAFB 207, and Re Cimeco North Western Australian Construction Projects Agreement [2012] FWA 526.
26 Louise Dodson and Mathew Dunkley, ‘High cost, low productivity nation’, The Australian Financial Review (Sydney), 14 February 2012, 1.
27 See section 3 of the Fair Work Act 2009 (Cth).
28 CCH International, Australian Managing Enterprise Agreements, vol 1 (at 10, 102) 9-220.
29 CCH International, Australian Managing Enterprise Agreements, vol 1 (at 10, 102) 9-220.
30 National Wage Case (1991) AIRC Print J7400.
31 Keith Hancock, ‘Enterprise Bargaining and Productivity’ (Paper presented at 20 Years of Enterprise Bargaining Workshop, Flinders University Melbourne 4 – 5 November 2011).
32 Keith Hancock, ‘Enterprise Bargaining and Productivity’ (Paper presented at 20 Years of Enterprise Bargaining Workshop, Flinders University Melbourne 4–5 November 2011) 2 – 3.
33 Louise Dodson and Mathew Dunkley, ‘High cost, low productivity nation’, The Australian Financial Review (Sydney), 14 February 2012, 1.
34 See: Tracey Casperz, ‘Bargaining and the Protected Action Ballot Order’ (2011) vol 38 no 10 Brief: Law Society of WA, 9.
35 National Australia Bank, Quarterly Business Survey—December Quarter 2011, 21 July 2011, 10.
36 See: Allan Drake-Brockman and Daniel White, ‘Dealing with oil and gas unions’ April 2011 Australian Petroleum Production and Exploration Association Journal.
37 See: Van Oord Australia Contract Propelled Dredging MUA Enterprise Agreement 2011 [2011] FWAA 9148.
38 Peter Kerr, ‘Deckhands’ pay soars, dockers strike’, The Australian Financial Review, (Sydney), 9 December 2011, 1.
39 See: Brunel Technical Services Pty Ltd Kipper Tuna & Turrum Project Agreement 2010 [2010] FWAA 7979.
40 Penny Williams, ‘Wages threaten projects’, The Australian Financial Review (Sydney), 17 February 2012, 10.
41 Allan Drake-Brockman, ‘Don’t let labour restrictions kill the resources golden goose’, The Australian Financial Review (Sydney), 14 June 2011, 24.
42 Department of Training and Workforce Development (WA), Western Australian Skilled Migration Strategy, 2001, 5.
43 Department of Training and Workforce Development (WA), Skilling WA — A workforce development plan for Western Australia, 2001, 89.
44 Geoff Bull, ‘Submission to the Migration Program for 2011–12 and beyond’, Australian Mines and Metals Association, 7 January 2011.
45 A resource project is an individual energy, mining, or metal protect (extraction or processing) that is represented by a single Australian entity. There can be more than one Enterprise Migration Agreement for a project.
46 Means an Australian registered entity who initiates, finances, and tenders for major resource project.
47 Bureau of Resources and Energy Economics, ‘Mining Industry Major Projects: October 2011’ vol 1 no 1 (November 2011).
48 Steve Knott, ‘Addressing the labour supply problem’ (Presentation to the Association of Mining and Exploration Companies Conference, Perth 30 June 2011) 31.
49 See: Pip Freebairn, Peter Kerr and Mark Ludlow, ‘Rinehart group wants foreign workers’, The Australian Financial Review (Sydney), 15 February 2012, 4.
50 Steve Knott, ‘Addressing the labour supply problem’ (Presentation to the Association of Mining and Exploration Companies Conference, Perth 30 June 2011) 23.
51 Allan Drake-Brockman and Philip Kirchlechner, ‘China trade in danger’, The Australian (Melbourne), 12 July 2011, 34.
52 Allan Drake-Brockman, ‘Don’t let labour restrictions kill the resources golden goose’, The Australian Financial Review (Sydney), 14 June 2011, 24.
