BHP delivers fresh cost warning on IR reform

BHP has waged a campaign against the changes for much of this year saying it would be a ‘productivity killer’ and an economic drag on the nation.

BHP Australia president Geraldine Slattery at the Competitive Advantage Forum, co-hosted by The Australian, in Sydney on Wednesday. Picture: John Feder

BHP has taken a fresh swipe at the Albanese government after warning proposed “same job, same pay” laws would slug the company $200m a year at its South Australian copper operations, hiking ­investment risks for the global miner.

The “same job, same pay” policy is designed to crack down on worker exploitation by labour hire firms and is a key plank of Labor’s second wave of industrial relations changes.

However, BHP has waged a campaign against the changes for much of this year, saying it would be a “productivity killer” and an economic drag on the nation.

In the latest round of criticism the company’s Australian president, Geraldine Slattery, said it was a poor policy that must be changed. “What’s being proposed not only adds costs but it crucially breaks the link between the cost of labour and productivity,” Ms Slattery told The Australian’s BHP Competitive Advantage Forum lunch.

BHP and the resources industry generally have argued that the reforms ignore issues such as the value of experience for long-term employees, and that the changes are more broadly opposed by big business.

“And that’s the piece that we take kind of particular offence to. It’s certainly not just BHP, or just the resources sector, but across many sectors and of course the Business Council of Australia which represents broader business,” she said.

BHP is looking at a significant investment in the copper industry in South Australia, but Ms Slattery estimates that the industrial relations legislation being proposed by the federal government could add as much as $200m to the annual operating cost of the project.

“That’s a drag on the investment case there,” she said.

“Part of the legislation essentially allows the same rate of pay and conditions provided across a large swathe of the workforce. Somebody with a year or two of experience is essentially compelled by law to pay the same as 10 years or 15 years. And that removes the opportunity and indeed the incentive for business and also employees to invest in their training capabilities and investments in technology.”

The global miner is already a big player in the copper business through its Escondida mine in Chile which produces one million tonnes of copper a year.

Copper is one of the minerals which is key for the energy transition and BHP said mines in South Australia could add a further 500,000 tonnes of copper a year. BHP boss Mike Henry has previously said Australia needed to be best in class when it came to the ease of doing business, but said the nation was actually going in the wrong direction and implored the political class to “stop doing more harm’’.

The company recently cautioned BHP will need to look at cost-cutting measures such as killing off its $300m FutureFit Academy program should the “same job, same pay” measures be adopted as currently designed.

Former BCA chief executive Jennifer Westacott has said it made no sense that someone coming into an organisation should immediately be granted the pay and conditions of a seasoned ­employee. The BCA has said the integrity of the enterprise bargaining system set up by the Hawke-Keating government could be undermined, which would leave the broader economy worse off.

Ms Slattery also said high inflation was impacting BHP the most in the price it has to pay for labour.

“Inflation is something that is impacting individuals, it’s impacting households, it’s impacting businesses and it’s impacting policy makers,” she said.

“We see that mostly in the cost of labour … from the perspective of the resources sector, where the cost of labour is incredibly high.”

Dale Connor, Lendlease Australia chief executive, acknowledged the damage inflation was having on business, saying the sector was longing for certainty on the cost of capital.

“It’s all about certainty (and) when can we get to that point of certainty,” he said. “Whether it comes down in a month or year. Everything that we do is about capital.”

He said investment capital was piling up, “waiting for that moment when rates will peak”.