Josh Frydenberg (Kooyong, Liberal Party) Share this | Link to this | Hansard source

'There is a winter of growing discontent out in the nation's workplaces.' These are not my words but those of respected journalist Alan Kohler, on ABC's Inside Business just a few days ago. The problem for this government and our economy is that these sentiments are not unique but shared by many. After promising with Fair Work Australia a new regulatory framework characterised by 'fairness and flexibility' we have seen graphic examples across the country of emboldened unions striking unsustainable wage rises as labour costs and union power increase.

Vulnerable to costly industrial action, employers, particularly in the construction, energy and mining sectors, have no practical choice but to reach agreements with unions who are unwilling to consider links to productivity gains being written in. The 30 per cent wage increase reached between the MUA and Total Marine Services in Western Australia and the CFMEU's deal with Thiess at the $5.4 billion desalination plant in Wonthaggi, Victoria, are two cases in point. Indeed the failure to achieve productivity gains at Wonthaggi is a factor in the recent profit downgrade issued by Thiess parent company Leightons. Now employers across the country are on notice. With workers at Wonthaggi receiving $50 an hour more than their compatriots across the state, the unions see this agreement as the new benchmark and not an isolated case.

But wages claims are just one element in a worsening workplace environment where productivity as measured by GDP per hour worked is down 1.8 per cent in the March quarter. Examples of this deteriorating environment include more far-reaching modern awards imposing increased regulations and restrictions on more work places and in the process forcing up labour costs for employers; an Australian Building and Construction Commission which now has a reduced capacity and inclination to tackle lawlessness and intimidation on building sites; greater right of entry for unions to enter the workplace; more onerous unfair dismissal provisions which act as a disincentive to hire; and a concerted attack on independent contractors to force them into direct employment arrangements whereby they can come under union control. And, in a major decision earlier this month, Fair Work Australia has given the green light to unions undertaking industrial action prior to workplace bargaining even getting underway.

While unions and the Gillard government see this as a win for workers, the Australian Chamber of Commerce and Industry see it as 'untenable for business' as it 'opens the door on a return to industrial chaos in the workplace'—not a good omen for an economy already suffering capacity constraints and for Labor's industrial relations framework which Julia Gillard herself declared in 2007 as being 'good for productivity'. What is more, with Labor's radical alliance partner the Greens—and their plans to abolish the ABCC, strengthen a union's right of entry and abolish secret ballots—soon to assume the balance of power in the Senate, who knows what further regulation, cost and complexity Labor has in store for Australian workplaces. And all this at a time when the OECD is imploring Australia to maintain 'labour market flexibility' as it is 'critical to sustained growth'. So the issue is: where do we go from here? Before the last election the coalition made clear that we had learnt the lessons of our 2007 defeat and that Work Choices was dead, buried and cremated. To this we all agree. At the same time we remain committed to flexibility in the workplace and real productivity gains which are, at the end of the day, the keys to higher employment and real wages growth. We also said last year that Labor's Fair Work Act was far from perfect but it deserved a fair go. So far, that fair go seems to be taking our economy in only one direction: higher wages and lower productivity. It is now time that all fair-minded employers, employees and industry participants speak out for change because such a combination of higher wages and lower productivity is unsustainable for the Australian economy in the longer term.