The Federal Government promised its Fair Work system would deliver “fair and balanced laws” that would “allow workplaces to become more productive and competitive”. 

It was designed, Deputy Prime Minister Julia Gillard said, “to balance the needs of employees and employers to ensure Australia is competitive and prosperous”.

Yet WA businesses are already experiencing costly and disruptive strikes just seven months after the new laws started. Far from creating greater productivity, the strikes are causing massive disruption to large projects on which WA is relying to drive the economy forward.

In WA’s Pilbara region, construction workers on Woodside’s Pluto project took illegal strike action for eight days in January and several days in December 2009 over changes to accommodation, ignoring return to work orders from Fair Work Australia and the Federal Court. The strike is conservatively estimated to have cost the companies involved in excess of $500,000 per day. Of greatest concern is the knowledge that workers are prepared to act unlawfully about an issue that is outside of a registered agreement.

The new Fair Work system gives workers the right to take (lawful) strike action if it is related to bargaining for a new agreement. Workers taking illegal strike action at Pluto are already covered by agreements that have a number of years to run. They are unlikely to be involved in bargaining for a new agreement for several years, hence the strike is illegal. The Government refused to use its powers under the Act to cease the unlawful action.

In the offshore oil and gas industry, workers went on strike for four days in response to a 29% pay offer from Total Marine Services. At the end of the strike workers gained a 30% salary increase representing an average $50,000 per worker. In addition, workers will receive an industry allowance of $214 per day. The increases give no productivity dividend back to the company. It is worth remembering that the workers in this industry are already the best paid seafarers in the world. 

The Federal Government refused to use its power to cease the industrial action over an unreasonable demand devoid of productivity gain. To the contrary, the Government congratulated the parties on achieving this result; one that will ultimately drive up the costs of doing business in WA by setting a successful precedent for similar demands and behaviour across the industry and into other sectors of the economy.

CCI is also aware of industrial action in a number of parts of the construction industry.  Unions and workers are emboldened by their success in achieving generous pay increases without being held to account in relation to both the lack of productivity returns and unlawful behaviour.

If unions plan to continue exploiting the influence they are enjoying under the Fair Work system and are not held to account, workplaces will not become more productive and competitive as the Government promised. Rather, Australians will face a loss of jobs and a loss of business investment in WA.

Since the commencement of the parliamentary year in early February, CCI has been actively lobbying the Federal Government, Coalition and independent senators to retain the current compliance powers and penalties for unlawful conduct residing with the Australian Building and Construction Commission. It is clear that the threat of significant penalties being imposed upon individuals is the reason for workers returning to work, particularly in the Pluto dispute.

The Government, on the other hand, appears committed to its policy agenda of watering down the compliance powers and penalties, notwithstanding current high levels of industrial unrest and unlawful action taking place.

For further information please contact CCI’s Marcia Kuhne on (08) 9365 7699 or marcia.kuhne@cciwa.com.

By Marcia Kuhne
CCI Industrial Relations Policy Manager

Although the impact of the global economic downturn continues to be felt by local businesses, 2010 looks set to mark the beginning of a new wave of growth and prosperity for WA.

CCI’s latest snapshot of state, national and international economies, Outlook, found that while conditions remain challenging, the WA economy is set to return to strong growth in the second half of this year.

CCI’s optimism is shared by a large number of businesses and households. The latest quarterly surveys tracking business and consumer confidence show that WA businesses and households believe that 2010 will be a better year for the State’s economy.

The December quarter Commonwealth Bank-CCI Survey of Business Expectations revealed a marked turnaround in business confidence, with WA businesses’ expectations for the economy in the year ahead surging to a 13 year high. Just nine months earlier, business confidence was at an all time low.

This renewed confidence means that WA businesses are looking to expand their operations, and hire more staff this year.

Meanwhile, the Curtin Business School-CCI Survey of Consumer Confidence found WA households are also optimistic about the year ahead, with many reporting an improvement in their personal finances and job prospects. Consumers also believe it is a good time to buy household goods and property.

The global economy is also on the road to recovery and will provide an important boost to WA’s exports. In recent months, the world’s major advanced economies of the United States, Europe and Japan have all edged out of recession, while growth in the developing world has accelerated.

CCI believes the stronger conditions overseas and locally will see the WA economy grow by 4.25% in 2010-11, before picking up to 5% in 2011-12, and 6% in 2012-13.

While WA remains a stand out performer, the national economy has also held up better than expected, although it continues to feel the impact of the global economic downturn. Economic conditions across Australia are expected to improve in the year ahead, with consensus forecasts compiled by CCI showing that the national economy will grow by 1.75% in 2009-10, before picking up to 3% by 2010-11. 

While WA’s future is bright, the next six months will continue to be a testing time for the local economy. The impact of the global economic downturn continues to be felt across the State with the WA domestic economy recording its lowest annual rate of growth in eight years in September 2009. Business investment also fell in annual terms for the first time in five years and export returns continued to be eroded by weaker commodity prices.

In a testament to the strength of the local economy, WA will be one of the few economies worldwide to avoid the first global recession since the 1930s, with a modest expansion of 1.5% forecast for this financial year.

The State’s labour market will also continue to suffer from the weaker economic conditions in the near term. However, the worst appears to be coming to an end, with the unemployment rate having reached its peak and businesses starting to hire more staff. CCI believes that WA’s unemployment rate will fall back to 4.5% in 2010-11, before dropping to 4% by 2012-13.

While the outlook for the WA economy is positive, this strong economic growth will also bring about a range of challenges. Action is needed by State and Federal Governments to ensure the local economy is ready for the opportunities headed its way.

The biggest issue for WA business in the year ahead will be the return of severe labour shortages.

More than half of all WA businesses believe that labour shortages will have a negative impact on their operations in a year’s time, with around one quarter already describing labour as “scarce”.

The December quarter Commonwealth Bank-CCI Survey of Business Expectations revealed that construction workers, managers, technicians and trades workers are expected to be in highest demand. However, labour shortages will be widespread across all industry sectors, all regions and businesses big and small.

It is critical that measures are adopted to boost the labour force, to ensure that labour shortages do not limit the ability of the economy to sustain its growth.

A range of other issues are also likely to have an impact on the capacity of businesses and the economy to grow
and develop.

In particular, housing shortages and associated affordability issues, infrastructure constraints, taxation and unnecessary layers of regulation and red tape will place restrictions on the capacity of WA businesses to grow.

It is imperative appropriate policies and strategies are put in place to encourage growth and development and address these key challenges. This will ensure that the State is well positioned to sustain and leverage off current and future economic opportunities.

CCI will continue to work closely
with State and Federal Governments,
to ensure these challenges are
properly addressed.