Taking productivity backwards

Ahead of the productivity roundtable in August convened by Jim Chalmers, labour productivity in the nation’s most important industry, mining, will take a heavy hit from a Fair Work Commission decision arising out of the Albanese government’s first-term industrial relations changes. On Monday unions scored a significant win against Australia’s largest company, BHP, under same job, same pay changes passed in November 2023.

The decision clears the way for average pay rises of $30,000 a year for 2200 labour-hire mineworkers at the Peak Downs, Saraji and Goonyella Riverside mines in Queensland’s Bowen Basin. It will cost BHP $66m a year, workplace editor Ewin Hannan reports. It is likely to be a test case, deterring much-needed investment.

Mining unions, predictably, were jubilant, hailing the decision as a “nail in the coffin for BHP’s sham labour-hire model”. ACTU secretary Sally McManus said: “Time’s up for BHP; it’s time to pay up and do it now. Whether it’s Qantas or BHP, Australian unions are determined to stop big business interests using loopholes to pay workers less by outsourcing labour.”

The case hinged on a point highly contested by BHP and Minerals Council of Australia chief executive Tania Constable: whether some workers, hired by the company but part of its regular workforce, were labour-hire workers or specialist service contractors.

In a Sky News interview in September 2023, Tony Burke, then employment minister, denied “completely, completely” that service contractors would be covered by same job, same pay changes. “Service contractors have been deliberately excluded,” he said. “Service contractors are carved out unless – and we needed to have this unless – unless the service you’re providing is effectively labour hire.”

In its decision, the FWC full bench said the evidence did not establish that the work of the employees in question involved the provision of “an identifiable and discrete service to BHP Mitsubishi Alliance as distinct from the supply of the labour of those workers”.

Ms Constable said the “incredibly disappointing decision” would “directly threaten thousands of specialised contractors who play a vital role in mining operations across the country”. Unlike labour hire, such businesses provide a specialised service, she said, not just workers, and should never have been covered by same job, same pay changes.

Almost any service contractor “will be captured by the legislation unless they can litigate their way out”. It is hardly the path to lift productivity, on which future living standards depend.