Miners see risk of inflated pay deals

Employers have warned that the Abbott government’s next wave of workplace policy changes threatened to lock in artificially inflated pay deals as a benchmark for future billion-dollar resources projects.

Under proposed changes to the bargaining rules for new projects, employers will be able to take a proposed greenfields agreement to the Fair Work Commission for approval if they have failed to reach a deal with a union within three months.

Greenfields agreements are a form of agreement that can be made under the Fair Work Act before any employees have been engaged at a new enterprise.

They are used extensively in large-scale construction and resource projects

As well as current approval tests, the government is proposing a new requirement that the commission will have to be satisfied that an agreement is consistent with the “prevailing pay and conditions’’ within the relevant industry for equivalent work.

The Australian Mines and Metals Association said yesterday the test threatened to­ entrench the inflated uncom­petitive pay deals it insisted were struck under the previous government.

In a submission to a Senate committee examining the changes, AMMA says the new test risks past pay deals forming a “hard floor for workplace relations arrangements on future projects”.

Employers have long argued that generous wage and conditions in the offshore construction sector were only agreed because the Fair Work Act gave unions the upper hand in bargaining.

According to AMMA, a barge welder can earn up to $2180 a day while a cook working for six months on an offshore resources project could earn up to $355,000.

“Having to compare new project terms and conditions to such agreements under the proposed prevailing industry standards test would concern employers seeking to undertake future operations productively and efficiently in Australia,’’ the submission says.

“Put crudely, the prevailing industry standards test risks forcing employers to make the same ‘mistake’ twice, and to rob them of any capacity to learn lessons, make changes, introduce innovations or take into account changing markets.’’

Employment Minister Eric Abetz yesterday rejected the complaints.

“In drafting its legislation the government took into account a range of suggestions, including those from AMMA,” Senator Abetz said.

“The government believes the bill as currently drafted is a fair and balanced approach which will significantly improve the process for making greenfields agreements.”

AMMA executive director Scott Barklamb speculated that the government might have introduced the test to try to control offshore wages.

“While perhaps intended to stop the ‘leapfrogging’ of wages from one construction contract to the next, employers fear the government’s proposed test may inadvertently lock in the currently inflated and unsustainable wage levels as the benchmark for all future projects,’’ Mr Barklamb said.

The AMMA submission recommends removing the “prevailing industry standards test” and only maintaining three existing tests: the National Employment Standards safety net, the Better Off Overall Test and the public interest test.

“The three existing tests are more than adequate to protect employees without any unintended consequences,’’ Mr Barklamb said. “Inflated wages are a direct result of the former government giving unions a virtual monopoly on new project agreement-making, effectively allowing them to set their own employment conditions which the industry has had little option but to accept.

“Our country simply cannot compete viably for future mega-resources projects when our workplace relations system imposes such uncommercial and unsustainable obligations.’’

He said the association would lobby the government, opposition parties and independent senators to get the bill amended.

The Maritime Union of Australia has regularly accused AMMA of overstating the impact of high wages, and denied new projects are being jeopardised.