Resources and energy employers have welcomed Attorney General and Minister for Industrial Relations, Christian Porter releasing a policy discussion paper on life-of-project agreements.

CEO of Australian Resources and Energy Group AREEA Steve Knott said allowing enterprise agreements to run the full length of major project construction is a sensible and long overdue reform, critical to securing the next wave of resources and energy project investment.

“The ability for an enterprise agreement to cover the full length of major project construction would provide critical investment certainty that will assist future multi-billion-dollar mega project development,” he said.

“The last wave of major resources and energy project investment was overwhelmingly beneficial to the nation, creating hundreds of thousands of jobs, huge economic gains and raising wages and living standards across the country.

“However, some recent mega projects have suffered cost blow-outs and completion delays due to unnecessary industrial action mid-to-late in the construction phase.

“Ameliorating this risk going forward by allowing an agreement to run the full length of project construction undoubtedly has merit.”

Life-of-project agreements would be a critical reform providing certainty around cost and timing of world-class resources and energy projects which take up to seven years to complete.

AREEA has long argued the case for ‘life-of-project agreements’ since before the commencement of the Fair Work Act 2009, and now forms one of the resources and energy industry’s eight key priorities for fixing Australia’s failing IR system, as outlined in Pathway to Productivity.

“Resources and energy employers welcome the Australian Government getting on with important industrial relations reform, with life-of-project agreements being an appropriate and sensible place to start,” Mr Knott said.

“We expect such a reform to be a clear improvement to Australia’s industrial relations environment; one that hopefully receives bipartisan political support given former Opposition Leader Bill Shorten’s pre-election endorsement of such a reform.”

AREEA will build a strong case for life-of-project enterprise agreements and how they would deliver more jobs and wage growth while strengthening Australia’s economy.

Minister outlines IR approach

In an address to the Committee for Economic Development of Australia (CEDA) 2019 State of the Nation Conference last week, Mr Porter highlighted the Coalition Government’s focus areas for IR reform.

Focusing on the release of the life-of-projects discussion paper, Mr Porter said businesses, communities and governments require infrastructure projects to be delivered on time and on budget.

“These projects often cover the construction of much-needed public infrastructure, such as hospitals, roads and schools, and require complex long-term planning and future investment in these projects will depend, in large part, on Australia being able to demonstrate an ability and track record of being able to deliver such projects without uncertainty about costs (including labour costs) and project delays,” he said.

“In this sense, the ability to predict the budget of the projects and deliver the project within a reasonable budget is the key to attracting investment and so create jobs.

“Overall, industrial uncertainty and the impact of industrial action can add significant costs and delay to major infrastructure projects, many of which are, at least in part, funded by the taxpayer.

“The Productivity Commission stated that any weaknesses in bargaining for a greenfields agreement can have ‘potentially large impacts on major project investment in Australia’ and that current arrangements ‘pose risks for large capital-intensive projects with urgent time frames’.

“This, in turn, poses significant risks to job creation in Australia.”

Mr Porter highlighted the potential benefits of longer project agreements as

• industrial certainty for employers and investors,
• better wages and conditions for employees, and,
• to the extent it encourages the making of greenfields agreements, improved engagement with enterprise bargaining generally, consistent with Fair Work Act objectives and the opportunity to generate higher rates of involvement in these types of projects and so supercharge Australia’s job growth.

The release of discussion papers on areas of IR reform follow AREEA strongly backing the Prime Minister’s move earlier this year to order an urgent review into Australia’s industrial relations framework, with a view to cutting red tape, addressing inefficiencies and unnecessary costs of the system.

Mr Porter said the discussion papers were a “simple method of exploring the areas where a series of readjustments can have the most potential impact”.

“There have been many recurring themes – complex awards, complex agreement requirements, delayed resolution of disputes, unpredictability of decisions, inconsistent levels of compliance, lack of flexibility, inconsistent meanings of casual employment inconsistency in codes dealing with small business dismissals,” he said.

“The list is long enough to warrant serious attention.”

Mr Porter released discussion papers seeking submissions on two important areas of industrial relations reform – life of project agreements (Project Life Greenfields Agreements) and underpayment of wages (Penalties Paper).

AREEA’s strong position is that legislating for “Project Life Greenfields Agreements” would provide critical investment certainty that will assist future multi-billion-dollar mega project development in our industry.

Building on our existing significant body of evidence, most recently highlighted in A New Horizon (pages 35-37), AREEA will present the strongest case possible for implementing this important reform to the Australian Government.

A succinct summary of the arguments in favour of Project Life Greenfields Agreements can also be found in Pathway to Productivity (page 9).

Members with evidence, views, or anecdotes related to this issue are strongly encouraged to get in touch as soon as possible.

For more information or to provide feedback and evidence into AREEA’s submission/s, contact AREEA’s policy team at [email protected].