BHP claims proposed labour-hire policy would cost company $1.3b a year

One of Australia’s largest mining companies says the government’s proposed same job, same pay policy would cost the organisation up to $1.3 billion a year and would threaten jobs if rushed through parliament.

The federal government is seeking feedback on the workplace reform, which it plans to legislate later this year, that would see labour-hire workers paid at least as much as directly employed workers doing the same job.

BHP said the same job, same pay policy would threaten jobs if rushed through, and could cost the company up to $1.3 billion a year.Credit: BHP

Employment and Workplace Relations Minister Tony Burke hit back at BHP’s costings given the policy is not yet finalised.

BHP said it supported the government’s goal of protecting vulnerable workers, but said in a submission that the same job, same pay (SJSP) policy in its current form would seriously affect its operations, harm productivity and risk the future of all forms of labour hire.

“BHP estimates the financial impact of SJSP to our Australian operations will be up to $1.3 billion annually. This cost is equivalent to the labour cost of approximately 5000 full-time employees across our operational workforce,” the company said.

“In order to address a cost impact of this magnitude, we will clearly need to review its implications for our Australian operations and the workforce that supports it.”

Burke said it was unclear how the company came to that figure given the legislation had not been finalised.

“If you close a loophole to stop workers being ripped off, it will result in an increase in the wages budget of any company that was using the loophole. We make no apologies for that,” he said on Monday.

“The details of this policy are not yet settled. That is the point of the consultation we’re doing with BHP and others.

“But as a miner said to me in the Hunter Valley this week: ‘How can you have an industry where because of a labour-hire loophole, casual workers are paid less than permanent workers who do the same job?’ ”

BHP has an in-house labour-hire provider, Operations Services, which supports 4500 permanent jobs with the company. BHP said the policy undermined that unit.

Mining and Energy Union general president Tony Maher said BHP should be worried its wages bill would go up under the slated reform after replacing thousands of permanent mining jobs with insecure and lower-paid labour-hire workers.

“BHP is right to fear that same job, same pay will lift their wages bill because they have been exploiting labour-hire mine workers for years,” Maher said.

“Along with other big mining companies, they have exploited weak laws allowing them to avoid paying the wages and conditions achieved through genuine enterprise bargaining. Same job, same pay laws will close this loophole.”

In its submission, published on Monday, BHP said the policy would compound productivity issues, particularly in mining where it said wage growth had consistently outstripped productivity growth.

“Australia already has some of the highest labour costs of any major mining nation, and within Australia, mining workers are among the nation’s highest-paid, with average wages around $148,000 a year, compared to $96,800 across all industries,” the submission said.

“SJSP will add to inflationary pressures by ratcheting up wages without any link to productivity and it will introduce economic uncertainty by interfering in the competitive labour market.”

The same job, same pay policy is part of a suite of workplace and employment reforms planned for this year, including widening the remit of the Fair Work Commission and criminalising wage theft.

Burke said earlier this year that legislation would be introduced in the second half of the year.

BHP said if the same work, same pay change was rushed through, it would have far-reaching economic consequences, including driving up inflation, risking productivity gains and threatening jobs.

“In the face of global economic headwinds, Australia needs an industrial relations system that delivers productivity, flexibility, and competitiveness to drive job creation and wage growth,” the submission said.

“Instead, SJSP is shaping as a policy which is driven by ideology, not economics, and a policy which has wandered well beyond the limited circumstances of the problem it was trying to solve.”

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