From Dow Jones today:
The Abbott government has held talks with major resource companies to suggest they delay multibillion-dollar oil and gas projects rather than give in to wage demands from unionised workers that would push up production costs.Employment minister Eric Abetz told major resource companies developing new energy projects to stand up to union demands for generous pay deals to allow projects to get off the ground, warning that giving in would just bring “long-term pain.”
…”We can confirm that we have had discussions with stakeholders regarding this issue,” a spokesman for Senator Abetz told The Wall Street Journal. He declined to specify those companies which had held talks with ministers.”Some of the employers do argue that it is very difficult when you’ve got a stash of capital in the corner which is costing you big, big dollars in interest or forgone dividends when these extravagant wage claims are made,” Mr Abetz said.
“They then do an analysis and it’s easier and cheaper to give in to the wage demands in comparison to the interest or forgone dividends you are burning. If you look at the long-term picture one might come to the conclusion some short-term pain will in fact be a long-term gain.”
Mr Abetz is half right but he’s five years too late. The firms in Australia’s LNG boom blew their own cost bubble. It may have been exacerbated by unions but the executives went in too hot and heavy and handed the unions the power by trying to build seven standalone projects at once. I sincerely doubt that locking workers out at this point will enhance the long term returns of the projects. The construction boom is winding down from this year onward and labour will be freed up anyway and costs fall.
It appears the Abbott Government is looking for another Patrick to recreate its 1998 waterfront war in which Patrick illegally restructured its workforce but was supported by the Howard government which used the dispute as a trigger to reform workplace laws.
