Figures show mining productivity is headed the wrong way under the Albanese government

The Minerals Council of Australia says the nation’s industrial relations laws and the rise of union power are incompatible with federal Labor’s new-found focus on productivity.

Minerals Council of Australia chief executive Tania Constable.

The mining sector is shaping as a litmus test of whether the Albanese government can achieve productivity growth as iron ore producers sound the alarms over a rise in union power.

Analysis of Bureau of Statistics data from within the industry shows the cornerstone of the economy has not escaped stagnating productivity growth.

The latest ABS data shows the mining sector’s multi-factor productivity (MFP) has declined over four consecutive years, including a fall of 2.3 per cent in 2023-24.

The numbers represent the worst consecutive falls since the beginning of the global financial crisis in 2008 and subsequent mining sector bust from 2011 that led to thousands of job losses.

The Minerals Council of Australia (MCA) has welcomed Treasurer Jim Chalmers’ recent commitment to boosting productivity but remains dubious of how he can achieve the goal in light of the government’s first term industrial relation changes.

MCA chief executive Tania Constable said it was encouraging to see the Treasurer put productivity at the heart of Australia’s economic agenda.

“Lifting productivity is essential to maintaining our living standards and economic resilience,” she said.

Federal Treasurer Jim Chalmers’ pivot to productivity pleases the Minerals Council. Picture: Tertius Pickard

“Mining delivers the highest labour productivity of any sector in the economy. That’s the result of sustained investment, cutting-edge technology, and a highly skilled workforce – it’s a strength Australia should be building on.

“At the same time, industrial relations changes are making it harder, not easier, for employers to boost productivity. Unless these barriers are addressed, they risk becoming an anchor on Australia’s productivity performance.”

BHP iron ore boss Tim Day said last week that some of the allowances made by the business to accommodate the return of unions to the industry are the “definition of unproductive”.

The mining giant has had to hire workers just to drive union officials around its iron ore mines after a 400 per cent increase in “right of entry” requests made by unions in the past year.

Mr Day pleaded for policy settings that enabled miners to be productive when asked about the impact of the government’s industrial relations reforms.

Rio Tinto iron ore boss Simon Trott, one of the favourites to replace Jakob Stausholm as the diversified miner’s chief executive, has raised the spectre of a return to the endless strikes and industrial dispute of the 1980s as unions flex their muscle in the Pilbara.

Sources said operational disruptions or delays were partly to blame for the alarming MFP numbers – the accepted economist metric – that on face value indicated the sector has been heading in the wrong direction for four years.

According to ABS data, underlying labour productivity in the mining sector has also declined since the Albanese government came to power. While Australia’s average labour productivity (across all sectors) fell by 0.31 per cent between 2021-22 and 2023-24, in the mining industry productivity fell by 3.14 per cent.

Ms Constable has accused unions of misusing new powers handed to them by the government’s industrial relation changes to bully their way into the Pilbara.

She made the claims after the Electrical Trades Union allegedly made dishonest “same job, same pay” claims and threats in an email to WA mining businesses.

ETU WA state secretary Adam Woodage said: “Let me be clear – the ETU is not going to be taking a backward step in the re-unionising of the resources sector.”

Originally published as Figures show mining productivity is headed the wrong way under the Albanese government