Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

Greenfield Agreements

The Fair Work Review Panel made four recommendations in relation to greenfields agreements. The first, Recommendation 27, was that good faith bargaining requirements apply to the negotiation of greenfields agreements.⁴⁷³ The second, Recommendation 28, was that employers intending to negotiate a greenfields agreement take all reasonable steps to notify all unions with eligibility to represent relevant employees.⁴⁷⁴ The third, Recommendation 29, was that s 240 of the Act should be available to be utilised to resolve disputes over greenfields agreement negotiations.⁴⁷⁵ The fourth, Recommendation 30, was that when an impasse in negotiations is reached, a specified time period has elapsed, and conciliation by the FW Commission has failed, the FW Commission may conduct ‘last offer’ arbitration upon application by a party or on its own motion.⁴⁷⁶

Each of these Recommendations has merit, save for the last. The difficulty with the form of arbitration proposed, and the form of arbitration subsequently proposed in the Fair Work Amendment Bill, is that it is devoid of a true examination or resolution of the interests of the parties and the triggers for its initiation are arbitrary. Further, it is to be recalled that Panel acknowledged that its recommendation concerning arbitration was made in response to a perceived or notional risk, rather than an assessment of evidence about the current operation of the FW Act⁴⁷⁷. The PC Issues paper takes the issue no further, nor do the assertions in the Explanatory Memorandum to the Fair Work Amendment Bill.

With the resources of the public sector behind it, the furthest that Explanatory Memorandum goes is to note that greenfields agreement negotiations are only one of several factors which could be responsible for project delays or why some projects may not be economically viable.⁴⁷⁸ It is disingenuous to lay the large proportion of blame which is currently asserted at the feet of unions for any delays in concluding a greenfields agreement or for additional costs associated with them. This is particularly so when the evidence, particularly in relation to the time taken to negotiate a greenfields agreement⁴⁷⁹, relied upon in the EM is speculative and anecdotal. Further, the Explanatory Memorandum provides that organisations making greenfields agreements tend to be large, often multinational or joint venture operations.⁴⁸⁰ We submit that these large businesses are the best equipped, or at least should be the best equipped, to handle agreement negotiations. They are the kinds of businesses which are most likely to employ a number of experienced human resources personnel who have the necessary skills to competently engage in bargaining. Further, the ancillary costs associated with negotiating greenfields agreements, such as travel and accommodation,⁴⁸¹ should be factored into any commercial venture as part and parcel of doing business, and are most likely to have the least impact on the types of businesses negotiating greenfields agreements.

In our view, there is simply no cause to take greenfield agreements effectively out of the mainstream system and provide unique “remedies” to unproven causes. This is not to say that arbitration should never be available in Greenfield contexts. Rather, we believe the approach recommended above in relation to bargaining arbitration more generally – involving flexible modes of intervention by the FW Commission having regard to the considerations there listed – is largely suitable to greenfields bargaining. In that setting, arbitration remains a last resort, but any arbitration is on the merits rather than on picking a winner as between two proposals in toto. Arbitration of the merits of greenfields agreements would appropriately involve consideration of the conditions applicable on projects of a similar scale or nature. Further, the agreements should be of limited duration so that conditions adapted to the operation in practice can be negotiated in the usual way.

The “problem” in the offshore resources industry

An industry that has consistently been singled out for commentary in the debate concerning appropriate arrangements for Greenfields agreements has been the offshore oil & gas industry. The commentary is poorly informed.
Despite employer groups making various unsubstantiated claims, we contend that circumstances in that industry are unremarkable and do not suggest that significant changes are required the agreement making process, let alone changes that would result in depriving unions of the capacity to negotiate those agreements. In filtering the hyperbole concerning this industry, we consider it important to not lose sight of the fact it is a highly profitable one involving considerably well resourced international and national scale corporations, such as BHP Billiton, with a 2014 profit of $8.8 Billion⁴⁸² ; and Chevron, with full-year 2014 earnings of $19.2 billion⁴⁸³.

The ACTU and a number of our affiliates made submissions to the Senate Education and Employment Legislation Committee Inquiry into the Fair Work Amendment Bill 2014 and relevantly opposed elements of that Bill that would have had the effect of allowing the employer, at the end of a three month negotiation period, to avoid having to make a genuine agreement with Unions and thereby permit the employer to simply apply to the FW Commission for the approval of the Greenfields agreement. The MUA submission relevantly stated:

The concern the MUA has over the proposal is that it appears to enable employers to effectively walk away from the negotiating table and simply wait until the 3-month negotiation period had lapsed before proceeding to have the agreement approved by the FW Commission. The assertion that this provision will enhance good faith bargaining cannot be sustained. Whilst good faith bargaining may ensue for three months under this proposal, following that period, the employer is free to walk away and have the Fair Work Amendment Bill 2014 agreement approved without any understanding having been reached. ⁴⁸⁴

Standing together with the MUA and numerous other affiliates, the ACTU strongly opposes legislation that would have the effect of allowing employers to set the terms and conditions of employment without their being a genuine agreement with unions and their members. It ought not be lost on the PC that the defensive stance into which the union movement was forced by this Fair Work Amendment Bill (and indeed this aspect of the present inquiry) was a response to a less than credible campaign, as a supplementary submission by the MUA to the to the relevant inquiry pointed out:
The Australian Mines and Metals Association (AMMA) has had significant success in creating the perception within the media and the community that workers in the offshore oil and gas industry, and, in particular MUA members, enjoy unreasonable wages. AMMA has done this as part of a campaign to change Australia’s industrial relations laws. Its strategy is to portray the wages of offshore oil and gas workers as a threat to future projects, and hence the economic and social well being of all Australians. Research undertaken by BIS Shrapnel in 2013 found that the claims AMMA was making about the wages of MUA workers in the offshore oil and gas industry were inflated by more than 40 per cent. The same research also found that the wages of maritime workers made up less than one per cent of the cost of building projects like the $54billion Gorgon project, and that competitiveness issues on that project were largely due to poor management. Given AMMA’s claims about the levels of wages in the sector, and their impact on the cost of building projects, are false, its assertion that wages could impact on the investment decisions for future projects should be discounted by the Committee.⁴⁸⁵