Government needs to keep an "open mind" on further IR reform: Ferguson

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Government needs to keep an "open mind" on further IR reform: Ferguson


Posted : Friday, February 28, 2014

If Australia is to secure the next wave of LNG development, the Federal Government must keep an "open mind" about further industrial relations reform, Australian Petroleum Production and Exploration Association (APPEA) Advisory Board Chairman, the Hon Martin Ferguson AM has told a CEDA conference in Perth.

Mr Ferguson also said Australia must reduce the cost of doing business in Australia and improve productivity.

Within a few years our country will overtake Qatar as the world's leading LNG exporter and has the potential for a further $180 billion in investment over the next 20 years, creating up to 150,000 new jobs, Mr Ferguson said.

"But if Australia is to secure the next wave of LNG development, then we must adapt to the macroeconomic changes afoot," he said.

Mr Ferguson said that with our worsening terms of trade and our competitors growing stronger "this is not the time for anyone to be reverting to a mid-20 century mindset, or adopting the view that somehow we can integrate with the global economy on our own terms".

"There are increasing signs that Australia is regressing towards a new phase of inefficient regulation and of increasing government intervention in business."

"Veteran manufacturing sectors have returned to calls for protectionism.

"A radical environmental movement has arisen that despises market economics. It is adept at creating fear campaigns to advocate for new layers of unnecessary regulation.

"Regulatory processes for approving projects are becoming increasingly inefficient.   And there are serious weaknesses in the development of a skilled workforce and support industries' supply capacity.

"There is only one way to maintain - let alone increase - our prosperity.   We must improve our productivity and reduce the costs of doing business in Australia."

Mr Ferguson said last year, a McKinsey report showed Australian costs for delivering LNG to Japan are up to 30 percent higher than competing projects in Canada and Mozambique.

"There is a very real danger that Australia may be pricing itself out of the global LNG market," he said.

He said that high labour costs and low productivity are an unsustainable mix and therefore elements of the Fair Work Act must be reviewed.

"The Government has tabled some changes to the FWA to bring into effect their pre-election policy commitments," he said.

"While the changes are a step in the right direction, they are really quite modest. I would urge the Government to keep an open mind on the need for further reform in this area.

Mr Ferguson also criticised some unions for their "short-sighted" approach to negotiations which will have a major impact on productivity and demonstrated "the need for a clear-eyed assessment of the Fair Work Act" with regard to:

The continued ratcheting up of wages and conditions under greenfields agreements - with the last agreement outcome becoming the starting point for negotiations over the next one;

The scope of matters that can be included in enterprise agreements and over which legally protected industrial action can be then be taken. This has meant restrictions in some circumstances over the use of contractors and other productivity enhancing measures; and

The nominal life of enterprise agreements. At typically three-four years, this is far too short for major projects like those in the LNG sector. It effectively means the renegotiation point often coincides with a critical point in the project life.

"As a country, we have to be hungry for investment and the jobs that go with it.   We need to think about how our workplace relations system can help attract that investment," he said.


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If Australia is to secure the next wave of LNG development, the Federal Government must keep an "open mind" about further industrial relations reform, Australian Petroleum Production and Exploration Association (APPEA) Advisory Board Chairman, the Hon Martin Ferguson AM has told a CEDA conference in Perth.

Mr Ferguson also said Australia must reduce the cost of doing business in Australia and improve productivity.

Within a few years our country will overtake Qatar as the world's leading LNG exporter and has the potential for a further $180 billion in investment over the next 20 years, creating up to 150,000 new jobs, Mr Ferguson said.

"But if Australia is to secure the next wave of LNG development, then we must adapt to the macroeconomic changes afoot," he said.

Mr Ferguson said that with our worsening terms of trade and our competitors growing stronger "this is not the time for anyone to be reverting to a mid-20 century mindset, or adopting the view that somehow we can integrate with the global economy on our own terms".

"There are increasing signs that Australia is regressing towards a new phase of inefficient regulation and of increasing government intervention in business," he said.

"Veteran manufacturing sectors have returned to calls for protectionism.

"A radical environmental movement has arisen that despises market economics. It is adept at creating fear campaigns to advocate for new layers of unnecessary regulation.

"Regulatory processes for approving projects are becoming increasingly inefficient. And there are serious weaknesses in the development of a skilled workforce and support industries' supply capacity.

"There is only one way to maintain - let alone increase - our prosperity. We must improve our productivity and reduce the costs of doing business in Australia."

Mr Ferguson said last year, a McKinsey report showed Australian costs for delivering LNG to Japan are up to 30 per cent higher than competing projects in Canada and Mozambique.

"There is a very real danger that Australia may be pricing itself out of the global LNG market," he said.

He said that high labour costs and low productivity are an unsustainable mix and therefore elements of the Fair Work Act must be reviewed.

"The Government has tabled some changes to the FWA to bring into effect their pre-election policy commitments," he said.

"While the changes are a step in the right direction, they are really quite modest. I would urge the Government to keep an open mind on the need for further reform in this area.

Mr Ferguson also criticised some unions for their "short-sighted" approach to negotiations which will have a major impact on productivity and demonstrated "the need for a clear-eyed assessment of the Fair Work Act" with regard to:

  • The continued ratcheting up of wages and conditions under greenfields agreements - with the last agreement outcome becoming the starting point for negotiations over the next one;
  • The scope of matters that can be included in enterprise agreements and over which legally protected industrial action can be then be taken. This has meant restrictions in some circumstances over the use of contractors and other productivity enhancing measures; and
  • The nominal life of enterprise agreements. At typically three-four years, this is far too short for major projects like those in the LNG sector. It effectively means the renegotiation point often coincides with a critical point in the project life.

"As a country, we have to be hungry for investment and the jobs that go with it. We need to think about how our workplace relations system can help attract that investment," he said.

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