CFMEU poses inflationary challenge for government

Jim Chalmers’s vision to remake capitalism, reported on Saturday, proposed no real solutions to the challenging situation facing the economy. That is, rising inflation, rising interest rates, a growing interest bill on federal debt and the need for productivity growth to fund better wages, profits and government revenue. Labor’s challenge just got harder, with the CFMEU flagging a push for “significant” wage increases for thousands of construction workers. In an interview with Ewin Hannan, the incoming national secretary of the CFMEU’s construction and general division, Zach Smith, said workers were facing a “horror show on housing” as the Reserve Bank continued “clobbering” workers with interest rate rises. The “horror show’’ will only get worse, especially for those with flexible mortgage rates, if wages breakouts add fuel to the inflationary fire.

The CFMEU prides itself on setting the pace for wages growth in the private sector. Before Covid, when interest rates and inflation were negligible, it was securing pay rises in commercial construction of 5 per cent. With industrial agreements recently expired in Queensland and due to expire in Victoria, WA and NSW, employers will find out what Mr Smith envisages when he says the union is “not just going to let our members navigate turbulent economic times without pay increases that ensure standards of living improve in this country”. The Electrical Trades Union is committed to pursuing annual pay rises of at least 5 per cent this year. Employer organisations warn a restrained approach to prices and wages is more prudent. Unions pushing for an “inflation-matching wage rise would only risk entrenching higher inflation, meaning more pain for all Australians’’, Australian Chamber of Commerce and Industry chief executive Andrew McKellar said.

On the positive side, at least the CFMEU’s construction division has been effectively excluded from multi-employer bargaining due to its history of law-breaking. That was one of the safeguards included by the Albanese government late last year to address employer concerns about its Secure Jobs Better Pay industrial relations bill. Under the legislation, a bargaining agent that has repeatedly breached the Fair Work Act is not entitled to be a bargaining agent for multi-employer bargaining.

The abolition of the Australian Building and Construction Commission, however, removes an important brake on militant industrial action in the sector. The government also scrapped the Coalition’s building code, which prevented employers from agreeing to insert different clauses into agreements if they wanted to remain eligible for federal government building work. As a result, the CFMEU will seek to have clauses reinserted into agreements during upcoming bargaining. Such clauses will require employers to convert casuals to permanent employment after a set number of weeks and insist on “same job, same pay”, removing the financial incentive for employers to engage labour hire en masse at rates below those paid to direct employees.

Intervention in markets in pursuit of social equity, sustainability and other “values’’ was the theme of the Treasurer’s magnum opus in The Monthly. The nation could be about to see its effects in action. Labor’s approach to workplace relations rewinds the clock to a rigid 1970s system that was dismantled by the reformist Hawke- Keating governments because it restricted productivity and growth. It was bad for workers, bad for business and bad for the economy. Under current conditions, as Australian Industry Group chief executive Innes Willox says, persistent inflation leading to further interest rate hikes, the prospect of recession, job losses and hardship needs to be avoided. At a time when the government needs inflation to be a short spike and not become an entrenched problem, the CFMEU wages push and its bid to tighten conditions in the industry will not help the national interest.