As Australian manufacturers face rising costs and growing global competition, new industrial relations reforms are raising concerns about increased regulation and reduced competitiveness.
Rob Backwell, Director IXL Group and Deputy Chair Geelong Manufacturing Council shares his thoughts below:
Until recently, Australia has had an industrial relations system and environment that recognised the importance of flexibility, productivity and competitiveness. It reflected the reality that, to survive, Australian manufacturers need to be able to compete with products made overseas, often in places with much lower labour costs, less stringent environmental and other regulations and, sometimes, with much larger government subsidies than apply here.
However, soon after coming to office, the Albanese government made significant changes to the industrial relations legislation. While there was absolutely no mention of these changes before the 2022 election, the effect was to significantly tilt the playing field in favour of trade unions. The consequence of this is now being felt in the Pilbara – the corner stone of our national prosperity – where militant unions are threatening to shut down BHP’s iron ore operations. On behalf of some of Australia’s highest paid workers, these unions are seeking further pay increases unthinkable for most Australians, let alone the workers employed by the iron ore producers in West Africa and Brazil with which BHP and the other Australian iron ore miners compete. Little wonder then that BHP has declared it will commit most of its future investment elsewhere. Global capital and investment goes where it is welcome.
In recent weeks, the attention of the media and public has focussed on the recent Commonwealth budget and the tax changes the Prime Minister promised “fifty times” before the last election weren’t going to happen. At the same time, and with much less scrutiny, the Government has made more changes to industrial relations laws.
Perhaps deliberately, the Government hasn’t been clear about how these new laws will operate. At a minimum, any employer wishing to participate, directly or indirectly, in all but the smallest Commonwealth Government funded project, will bear additional compliance costs.
However, it seems likely these changes will effectively ban non-unionised employers from participating, even as relatively small sub-contractors or suppliers, in Commonwealth Government funded projects, whether related to defence, infrastructure or anything else. This fundamentally conflicts with the principle of freedom of association which has been at the core of workplace relations in Australia for decades. Until now, Australian employers and employees have been free to decide for themselves whether a union should be part of their workplace. Maybe not for much longer.
To give local context, Geelong’s advanced manufacturing base employs over 11,000 people locally and contributes $1.7 billion a year in value add. A meaningful part of that, including defence and infrastructure projects, sits inside Commonwealth-funded supply chains – the space now reshaped by new rules.
These recent changes are yet another example of governments, at all levels, imposing more tax and more regulation on the people who actually do and make things to create the jobs, incomes and wealth in our society and to pay the taxes which funds those governments. More tax and more regulation is not, and can never be, the path to productivity and international competitiveness, let alone prosperity.
At a recent Geelong Manufacturing Council event, I asked the Deputy Prime Minister Richard Marles and the Minister for Industry Tim Ayres whether they had any plans to address what I believe to be the fundamental challenge faced by Australian manufacturers today, being the ever-escalating cost of doing business in this country. There wasn’t a clear answer that day, but these recent actions speak more loudly and clearly than any words.