AREEA has called for urgent reform to laws governing industrial relations on new resource projects to help encourage greater investment following a significant drop in the forecast value of Australia’s resource and energy exports.

The Office of the Chief Economist’s new Resources and Energy Quarterly reveals that the forecast value of Australia’s exports for 2016-19 has been revised down by $113 billion – 14% lower than the value forecast just 12 months ago.

The value of our exports is now expected to total $235 billion in 2019-20. While this is a 6% average annual increase from 2015-16 onwards, AREEA executive director, Scott Barklamb, released a statement calling for policy makers to focus on improving our country’s ability to compete for new investment.

“The downgrade in the forecast value of resources means lower taxes and royalties than previously expected and further pressures on business spending and jobs,” he said.

“Just as employers are already having to trade on higher volumes to make money, it will be in the national interest to increase our share of global resource exports in a lower commodity price environment.

“Lowered export earnings forecasts underscore the need for our policy makers to take urgent action to improve Australia’s attractiveness as a destination for global resources investment.”

Mr Barklamb said one significant way to help increase investor confidence is to improve the laws governing employment agreements for new (greenfields) projects, which currently require employers to accede to union demands before a single person can be hired, or a sod turned on a new project.

“The ‘veto power’ our existing laws give unions contributes to delays and high costs that are dragging down Australia’s reputation to deliver complex, multi-billion dollar resource projects on time and on budget,” he said.

“International investors are marking Australia down as a place to do business because they cannot rely on our industrial relations system to deliver reliable, timely and cost effective employment arrangements.”

The Senate looked close to a breakthrough on some useful reforms to greenfields agreement making in September, but they were not passed, and unions are doing all they can to oppose any changes to their current preferential veto powers.

The need for reform was recently recognised by the Productivity Commission, in its draft recommendations to improve Australia’s workplace relations framework, which include:

• A ‘life of construction’ agreement option (on top of a maximum five-year agreement length).
• Providing alternatives to making a deal with unions where negotiations stall.

In its reply submission to the Productivity Commission’s draft report, AREEA called for reforms to go further including:

• Scope to roll over greenfields agreements with employee support.
• Head contractor greenfields agreements that other contractors can then follow.
• Ensuring tests for greenfields agreements do not entrench already inflated wages and conditions.

“Consensus for urgent reform in this area is growing. The Opposition should not continue to filibuster and block reform as evidence mounts that Australia needs to attract more resource investment to help grow our long-term export capacity, drive our national economy and create jobs,” Mr Barklamb said.

KPMG research commissioned by AREEA found that it can often take two years to secure a greenfields agreement that will only run for four years. However, shortening the delay to negotiations by just two months would increase an average resource project’s net present value by $4.6 million.

Click here to read AREEA’s reply submission to the Productivity Commission’s draft recommendations, lodged in September 2015.

For more information on AREEA’s workplace relations advocacy, speak to a member of our friendly policy team by calling 1800 627 771.