CCI WA Chief Economist states Federal Government reforms will hurt regional Australian businesses.

  • PublishedSeptember 20th, 2023
CCI WA Chief Economist Raises the Alarm Regarding Federal Government's Delays in its Environmental and IR Reforms, Siting Negative Impact on Regional Australia, Particularly Western Australia, in particular the Goldfields-Pilbara - Gascoyne - Esperance region's abundant resources, infrastructure, and skilled workforce as the foundation for "enormous opportunities," these opportunities are at risk, Aaron Morey, CCIWA Chief Economist, also notes that "the challenges are as significant as the prospects."

A primary concern for business growth in the region lies in the Federal Government’s industrial relations reforms. Morey emphasized this during the Goldfields-Esperance Major Projects Conference.

Expressing these regions have nearly everything it needs: industrial land in proximity to major infrastructure, a variety of transportation options, high-grade deposits of lithium and other rare minerals, renewable energy opportunities, a proficient METS sector, and access to international markets, notably through the strategically positioned Esperance Port as an example. Plus the means and desire of local businesses and communities to implement renewal energy systems, diversify local economies, and create additional employment opportunities, while ensuring energy security and cost reliability for all stakeholders.

Demonstrates the Federal Government is pulling in the opposite direction, and needs to better review the potential outcomes of its policies and policy delays, as its industrial relations, environmental approvals, and renewable energy policies seem at odds with each other.

It's argued the proposed IR reforms in particular introduce significant uncertainty regarding long-term economic viability.

Of particular concern to CCIWA is the labour-hire provisions, known as ‘Same Job, Same Pay’. "We were given assurance by the Federal Government that service contractors would be explicitly excluded. This does not seem to be the case."

These proposed workforce changes will significantly impact Western Australia, where contracting and labour hire are integral to the dominant mining and agricultural sectors. "This reform will reverberate throughout the WA economy," says Morey.

"It will directly increase costs for businesses, which are already struggling to secure staff. Businesses that rely on the labour-hire industry will find their competitiveness compromised by these 'same job same pay' conditions. Moreover, it will introduce considerable complexity for labour-hire companies, which will now need to manage multiple pay rates for their labour."

An underappreciated consequence of this is that the availability of labour hire services will likely diminish as a result.

CCIWA firmly opposes these reforms and is actively working to have them revised.

The prevailing sentiment among Australian businesses is that the Federal Government's IR reforms effectively adopt a Marxist approach to a free market. This market is already grappling with a shortage of skilled labour supply. Arguably, the Federal Government's focus should be on immigration policy, acknowledging the contributions of current working visa holders, allowing them to remain in Australia longer, while streamlining other skilled migration avenues and opportunities.

The Government policy is arguably "back to front." It has been fixated on Inflation, rather than recognising inflation has in part been driven by increased labour costs, labour supply as much as goods/services supply chain delays, and costs. 
The delays in immigration policy implementation and processing of applications have further diminished competition in the labour market. Australian employers lose skilled migrant labour due to these delays and lack of foresight, employees they'd prefer to retain. While working migrants lose their chance to remain in Australia and continue to contribute to the Australian economy. An emphasis on skilled migration needs to focus on both retaining and obtaining skilled labour. This both enhances the labour market, increases labour competition, and reduces wage growth resulting from high labour demand and labour low supply. 

It's been argued this would've been an effective tool to help reduce inflation caused by increased consumer spending early on in the 2022/2023 financial year.

Now, under it appears these proposed "Same Job, Same Pay" policies, employers are expected to pay semi-skilled employees the same wages as skilled employees. This approach seems fundamentally flawed, creating further uncertainty for businesses in an already volatile market.

Additionally, changes to union delegates' rights are on the table. Morey points out, "Under these changes, the Fair Work Commission will effectively enable unions to enter workplaces where there are very few current members for the purpose of recruiting new members. Delegates will also be granted powers to represent not only union members but any member of the workforce. And perhaps most concerning of all, employers will be required to pay for workplace delegate training. "We expect this will be exploited. Expect a significant increase in training." 

Then there is the environment - project delays.

Lengthy environmental approvals for major projects are impeding growth, this includes renewable energy projects, which are desired by the government, industry, and community alike, primarily for energy security, and affordability, let alone global warming concerns. 

The consensus among Western Australian businesses is one of "high frustration" with the time taken to obtain approvals at both state and federal levels. "Approvals that used to take two to three years are now taking four to six years. While robust regulations are necessary to protect our unique environment and cultural heritage, a sensible balance must be struck." Arguably better to have a project denied in 2 years rather than have it take 6 years for the same outcome. 

Morey believes that the region's success will necessitate collaborative efforts from businesses and governments.

The governments are "doing some things right." Morey acknowledges, "We are optimistic that the Federal Government is moving in the right direction in reforming the nation’s skilled migration system. The WA Government has established the WA Investments platform and is looking to streamline approvals for certain projects related to green energy."

However, the Federal Government's Nature Positive Plan agenda appears to be "moving in the wrong direction," according to Morey.

"Over the past few months, we've been consulting with our members in mining, agriculture, tourism, space, and defence. Through that, we've identified the total investment across the State subject to environmental approvals, as well as estimating the projects that are either at risk of being scaled back or abandoned entirely. Soon we will release that research to highlight to the Federal Government just what is at stake for our economy as they proceed with their Nature Positive reforms. Without revealing the total amount of investment we've identified subject to approval, what I can say is that 45% of that investment is earmarked for the Mid-West and Goldfields-Esperance regions, with the lion's share earmarked for the latter."

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