InvestSMART

Return of the industrial bench

WITH the inconclusive expiry of the negotiating period enforced on Qantas and three of its trade unions, their dispute has gone to compulsory arbitration at the Fair Work Australia tribunal.

WITH the inconclusive expiry of the negotiating period enforced on Qantas and three of its trade unions, their dispute has gone to compulsory arbitration at the Fair Work Australia tribunal.

WITH the inconclusive expiry of the negotiating period enforced on Qantas and three of its trade unions, their dispute has gone to compulsory arbitration at the Fair Work Australia tribunal. Though the government's referral of the dispute to this process is now under legal challenge by at least one of the unions, this effort to keep direct bargaining in play is seen as a long shot. The public can be reasonably certain that air services will not be disrupted over the looming holiday period.

Arbitration is usually welcomed by the party that expects to get most of what it wants. There is much criticism of the Fair Work legislation as favouring union power, and the tribunal as ''stacked'' with former union officials, but in this case it is clearly the employer which is embracing the process most eagerly. Qantas declined the option sought by unions of a further three-week negotiating period.

Assuming the union action in the Federal Court is unsuccessful, arbitration will take several months. This could be a gruelling exercise for Qantas's chief executive, Alan Joyce, and could include public hearings. But it narrows the area of dispute down to pay and conditions in the Australian operations of the airline, rather than the plans to diversify the business into new subsidiaries in Asia, and their effects on employment prospects in the home country.

Meanwhile, both company and workforce are barred from industrial action. The public will have a chance to see the parties put their arguments in a relatively neutral forum, and to judge which are putting reasonable demands and making constructive concessions.

The wider implications of the proposed restructuring of Qantas operations will still have immense public interest. Many people will wonder whether, given the pace of expensive technical innovation, airlines can ever deliver the returns on capital and profitability stipulated by market purists, and whether they should not be regarded as a kind of essential infrastructure and national resource. The feasibility of the new subsidiary airlines mooted by Qantas - a low-cost carrier in Japan and a premium carrier in Singapore or Malaysia - will also be closely studied, especially given the mixed results from existing subsidiaries. And if a move upmarket is precluded by domestic labour costs and currency appreciation, what hope has Australia of positioning itself as a centre of high-quality services for the rest of Asia?

These are big questions, way outside the ambit of Fair Work Australia. A first step to reassurance that Qantas is on the right flight path would be the restoration of mutual trust between its management and workforce.

Gillard gets her eureka momentTHE passage of the mining tax through Parliament, now all but certain, will mark the end of a bruising episode in the Gillard government's life - one of several. The tax's gestation has been troubled right to the end, with the Greens objecting to last-minute concessions which the independents won for their support. The tax is obviously a compromise among all sides. The compromises have made the result less than ideal, as many critics from within mining and outside it have pointed out. Its main shortcoming: it applies only to coal and iron ore. They are the most important minerals Australia produces, certainly, but they are far from the only ones, and profits are profits, whether from iron ore and coal, or alumina, copper, zinc, or anything else. The need for the tax has been made obvious by the jump in the value of mineral exports. State mining royalties, levied on the volume of ore produced, do not reflect the higher value which miners are now earning for digging up and selling a resource owned by all Australians.

Figures from the Bureau of Agricultural and Resource Economics and Sciences show the trend: royalties represented 9.2 per cent of the total value of minerals extracted in 1990-1 but only 6.2 per cent in 2006-7. The public's share of this wealth has been declining.

The mining tax, flaws and all, is thus a lot better than the status quo. Voters appear to have accepted it, too - a big change from a year ago when the miners' emotive advertising had persuaded them that taxing mining profits threatened their superannuation, not to mention the Australian way of life. The sudden deep unpopularity of the coal seam gas industry has helped.

Canberra was right, too, to parry the attempts of Western Australia and NSW to obstruct the tax by raising royalties in certain cases. Whatever the excuse in each case, the increases were intended to exploit Canberra's undertaking to refund all state royalties to mining companies paying the tax. These attempts at cleverness did little more than emphasise how dysfunctional the federal system has become, when one level of government sees an advantage in exploiting another.

Labor will be hoping the change of mood towards this tax may signal the start of a wider revision of opinion about the government's performance in general. Perhaps it will, but the government will have to be less clumsy and more articulate in selling its policies if the effect is to last.


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