Statement by CCI Executive Director, Economic Policy, John Nicolaou

The latest Commonwealth Bank-CCI Survey of Business Expectations has revealed the Federal Government’s new industrial relations system will cost affected businesses on average more than $100,000 and make them less willing to employ more staff.

The June quarter survey has found that a majority of Western Australian businesses, believe that the new industrial relations laws, which come into effect in the next few weeks, will be bad for business.

The survey, which canvassed the views of more than 570 firms operating across a wide range of business and industry sectors, asked respondents to rate the impact of the new industrial relations system on their business.

More than half of all respondents said that the new system will adversely affect their business. Five per cent of respondents predict the changes will have a “very negative” impact. Medium and large businesses are most concerned, with more than half saying they will be worse off.

While most aspects of the new system will affect business, increased exposure to unfair dismissal claims is the greatest concern for nearly half of respondents. Medium sized firms, and those operating in the mining, retail and wholesale trade sectors say they will be the hardest hit.

Award modernization was the second biggest concern. Nearly one third of businesses, particularly large companies and those operating in the retail and wholesale trade sectors, are likely to be affected.

Respondents were also asked to estimate what cost the new industrial relations system will have on their business. On average, the change will cost businesses more than $127,000. Cost estimates range from $1,000 in smaller businesses, up to $2 million in large businesses.

The changes are also likely to cost jobs. Around 70 per cent of affected respondents said they will be less willing to employ more workers as a result of the new industrial relations system.

Around eight out of ten affected small businesses, and those operating in the manufacturing sector, say they will be less willing to hire new staff. Almost two thirds of affected firms say they will be burdened by higher administrative costs.

A further 13 per cent of affected respondents believe the new industrial relations system will result in greater redundancies.