Sclerotic IR laws dragging down living standards

Like all taxpayers and businesses, workers on award wages and conditions are losing out under the nation’s sclerotic industrial relations regime. Labor and the ACTU like to claim the Fair Work system is “getting wages moving”.

But that is only a limited part of the picture. It is also suppressing productivity, one of the main determinants of living standards, which is harming all Australians, especially workers and their families. Analysis by The Australian this week showed that 65,100 out of 415,500 working days lost to industrial action across the economy since April 2022 have directly hit the construction industry, with the bulk of days lost occurring in 2024.

Consumers are paying the price, Geoff Chambers and Simon Benson wrote. The cost of building a new home has risen by more than $120,000 in NSW and by $87,960 in Victoria. The delay in building a new home in NSW has increased by 45 days in three years and it now takes on average 136 more days to complete a home in Western Australia.

Such demolition of the building sector, in which more than one in four construction firms – 7661 out of 28,962 – became insolvent between June 2022 and March 2025, is intolerable. So is the drag on Australia’s biggest defence projects – a national priority – which are experiencing a colossal wages cost blowout that is more than double inflation.

To the detriment of all taxpayers, BAE’s Hunter-class frigate program is the latest target, where more than 500 workers are demanding a 30 per cent pay rise across three years. ASC submarine workers at the Osborne shipbuilding precinct in Adelaide gained an 18.5 per cent upfront wages boost in November 2024. Other sectors hit hard by insolvencies on the Albanese government’s watch include hospitality and retailing.

The impact of poor productivity on living standards is clear from recent OECD data. The average gain in living standards by OECD nations was 5.5 per cent since March 2022; Australia’s living standards declined by 7.9 per cent. Denmark suffered the second worst fall at 2.8 per cent but fared much better than Australia.

The Coalition’s policy to restore the building industry watchdog, the Australian Building and Construction Commission, abolished by Labor two years ago, is essential. As Liberal frontbencher Michaelia Cash says, under the Coalition the ABCC reduced working days lost to disputes from about 57,000 to consistently below 20,000, and litigated more than 2500 law breaches resulting in more than $17m in fines across six years, especially of the militant CFMEU.

But to restore competitiveness the major parties need to go further. In the spirit of the Hawke-Keating years and the first round of Howard government IR reforms, workplaces need policies that trade productivity gains for better wages and conditions for workers. Future living standards depend on it.

For good reason, peak business groups – the Business Council of Australia representing corporations, the Australian Chamber of Commerce and Industry speaking for small to mid-sized businesses and the Minerals Council of Australia – argue that the economy is being crippled by excessive union influence over business operations, long delays in project approvals due to excessive red and green tape, and uncompetitive taxes.

The sharpest fall in business operating margins for 25 years, noted by the Australian Industry Group in its pre-budget submission, is another good reason to tackle workplace reform. Labor and the ACTU, under their current mindset, will be reluctant to free up the system, which clears the way for a significant opportunity and challenge for Peter Dutton.

Master Builders Australia is urging the Coalition to commit to winding back Labor’s changes to independent contracting. As Ewin Hannan writes, the MBA wants whichever party wins the election to “stand up for the rights of self-employed tradies, independent contractors, and the right for people to choose to be their own boss and work for themselves”.

Free of undue union interference, such independence would be a path to better productivity and return for effort. It is the direction workplaces across the nation need to help rebuild living standards.