The Abbott government has a two-year window to reform Australia’s industrial relations system or risk missing out on an additional $180 billion in projects and 150,000 jobs by 2030, the Australian Petroleum Production and Exploration Association (APPEA) says.
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There are seven major liquefied natural gas projects worth about $200 billion under construction in Australia but the APPEA says the future of the next $180 billion wave of projects hinged on cutting project costs, reducing union power and boosting flexibility.
In comments intended to ratchet up pressure on the Abbott government to speed up its industrial relations reform agenda, APPEA chief executive David Byers said the former Labor government’s Fair Work Act was a handbrake on productivity and had encouraged high costs and more strikes in Australia.
The APPEA wants the Abbott government, which has taken a cautious approach to workplace reform so far, to end labour market testing for skilled foreign workers coming in on 457 visas, stop unions who are not party to a labour agreement entering work sites and impose bigger fines for unlawful strikes.
It has also called for a new "major project agreement" for mega projects worth more than $5 billion to be used to hire workers. The new agreement would run for the life of a project, rather than being limited to four years, to give multibillion-dollar projects greater certainty.
Mr Byers said Australia was on track to overtake Qatar as the largest LNG exporter in the world in the next decade but "our ability to capture that second wave of LNG investment is at serious risk from rising competition in the LNG marketplace".
"If we are able to remain globally competitive . . . we have to reduce the cost of doing business in this country," he said.
The Abbott government promised a sweeping Productivity Commission review of the Fair Work Act before the election and to restore the Australian Building and Construction Commission, though that move has stalled in the Senate.
Labor and the Greens oppose these measures, as well as other changes the government argues will introduce additional flexibility to work laws.
But, despite growing calls from the Coalition backbench for more ambitious industrial relations reforms, such as a reduction in penalty rates – and mindful of a WorkChoices-style campaign by Labor – the Abbott government has so far shown no appetite to go beyond its pre-election promises.
Mr Byers also highlighted data from the Australian Mines and Metals Association that showed an offshore barge welder’s wages had grown 44 per cent from 2007 to last year, from about $280,000 to $400,000, while a cook's wages had risen from about $240,000 to about $350,000 in the same time.
Chevron Australia managing director Roy Krzywosinski said his company, which is the lead operator in the $54 billion Gorgon LNG project and $29 billion Wheatstone LNG projects in Western Australia, wanted structural changes to industrial relations laws.
"All of us – industry, government, buyers, sellers and unions – have a shared mutual interest," he said. "We appreciate the government is open for business and its focus on driving down high costs is a step in the right direction.
"We need bipartisan support now to address Australia’s high-cost environment to secure Australia’s next wave of LNG investment."
The APPEA has estimated the cost of delivering LNG to Japan, the biggest market for Australian gas, could be up to 30 per cent higher than comparable projects in Canada and Mozambique.
James Massola travelled to Western Australia as guest of the APPEA.
