Category Archives: Committees

AmCham Committee articles

Industrial relations system creates high-cost, low-productivity projects

As the Productivity Commission finishes its draft report into workplace relations, one question it must ask is why does the system create high cost, low productivity projects? AmCham Human Capital Committee chairman and Seyfarth Shaw partner Chris Gardner considers the issue in a opinion piece for the Australian Financial Review.

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Chris Gardner, Seyfarth Shaw

Last week, the Australian oil & gas Industry converged for its annual conference hosted by the Australian Petroleum Production & Exploration Association. The conference illustrated the great opportunities Australia has in LNG. It also served as a reminder that realising these opportunities depends upon deep investment in project infrastructure. Alas, we are expensive by international standards. Labour cost and productivity are becoming burning issues with our relative position poor by international standards.

As the Productivity Commission puts the finishing touches on its draft report into the workplace relations framework, a key question it will need to answer is, “What is it about the regulatory environment that drives high cost and low productivity outcomes on major projects?” Let me help.

First, there is what I call horizontal price control between projects.

This is the phenomenon which sees the price of labour set from one project to another, with the most recent project providing the starting point for the next.

The owners and developers of a new project have significant capital at play. They cannot afford for it to sit idle. Delay is untenable. The prospect of industrial action risks delay. Under the existing regulatory framework, the only real option to ameliorate the risk is a “greenfields” (enterprise) agreement. Such an agreement can only be made with one or more unions.

In effect, unions are put in a monopoly position for the supply and price of labour. “Price” is thereby distorted by this alone. Of course, it’s not just price, rostering arrangements often aimed at maximising overtime pay and union-control clauses are also in the mix.

The previous federal Labor government’s inquiry into the Fair Work Act acknowledged this dynamic, as did the Productivity Commission in its report last year into public infrastructure where it noted that, “unions routinely use the commercial risk faced by contractors as a lever to secure industrial concessions”.

This is not a criticism of union negotiating behaviour, it is a function of regulatory shortcomings. The issue has been raised squarely by the Productivity Commission again in its current inquiry into the workplace relations framework and has been the subject of a number of submissions.

There is also “vertical price control”. This is where the price of labour is set at the top of the project supply chain and is demanded of any and all sub-contractors throughout. Head-contractors effectively drive this outcome.

Sub-contractors are then limited in their ability to establish their own terms and conditions, and often the price of labour is standardised at the highest common denominator. Given this practice is fundamentally anti-competitive, why do economically rational, well-resourced players in key sectors of our economy accept it?

The project owner and head contractor need stability and certainty to deliver projects on time and it’s this quest for stability which is regularly offered as the reason – or at least a key reason. The question then for the Productivity Commission is, “to what extent is any regulatory shortcoming the underlying driver for the instability which is sought to be avoided?”

The link between investment in major projects (whether in resources or otherwise) and our labour relations environment is obvious and seemingly well accepted, so the practices relating to greenfields agreements and enterprise bargaining more generally will be a key focus for the Productivity Commission.

Fundamentally, the link between the “levers and pulleys” under the legal framework and negotiating behaviour needs to be understood. There are three dimensions here. First, evaluating where leverage sits as between the negotiating parties. Second, the impact of not reaching an agreement for both parties needs to be understood – it alone creates negotiating leverage. Thirdly, there is the monopoly position unions enjoy when it comes to setting terms and conditions in particular environments.

Chris Gardner is a partner with Seyfarth Shaw, a workplace relations law firm.

AFR Contributor

 

 

Industry Skills Fund great for professional development

AmCham’s Human Capital committee heard from Rina Rose’meyer of Industry Skills Victoria this week about the newly launched Industry Skills Fund, and how SME employees can benefit from the variety of support available.

The $467 million Industry Skills Fund was launched in January 2015 by the Federal Government and will provide up to 200,000 training places and various support services to help businesses grow and be more competitive on a global scale. Continue reading

Why banks need to ‘switch on’ to Gen Y now – KPMG

They don’t see themselves using social media channels to bank in the future. Security measures are a bore and ‘annoying’. And almost all currently don’t have a financial planner, however most would like financial coaching . . . for free. These are among the views of today’s Gen Y professionals, who will become a significant customer group for retail banking by 2030.

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AmCham member KPMG Australia’s second report in its series, Banking on the Future: The expectations of the Gen Y professional, is based on a study undertaken by the firm into the banking and wealth desires of Gen Y professionals. It has revealed a fundamental change in the way this generation is thinking about banking – and highlights significant implications for banks.

“Generations X and Y will dominate the financial space of the next few decades. Their share of financial assets, which sat at just 36 percent in 2010, will jump to 70 percent in 2030. For Gen Yers, it’s only the beginning of what will be a 40-50 year experience as workers, consumers, savers, borrowers and investors,” said Daniel Knoll, the report’s co-author and Head of Financial Services Management Consulting for KPMG Australia. Continue reading

NSW NEXT Network for Young Professionals gaining momentum in 2015

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NEXT New South Wales members network at a Sydney event

2015 is well underway and AmCham’s commitment to young professionals in Sydney and across Australia is stronger than ever.

The 2015 NEXT program for New South Wales will focus on engagement. The committee aims to delve further into what current young professionals experience in business and to provide a platform to share their voices and experiences that help to shape this next generation of leaders in Sydney. Continue reading

Trade Advisory Board heads to Washington D.C

AmCham’s newly established Trade Advisory Board (TAB) has hit the ground running, taking the lead in arranging a delegation to participate in the SelectUSA Investment Summit in March 2015.

The TAB, which was established in November, will be an information hub for doing business across the Pacific. It will carry out planned initiatives from regular meetings and events, to business briefings on investment with the US or Australia. Continue reading

Energy and Resources Committee hits the ground running

With energy and resources as one of Australia’s biggest industries – and a huge economic driver particularly in Western Australia – AmCham has launched an Energy and Resources Committee to represent and generate debate in the sector.

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Deputy chairman David Parker, chairman Jim Rodgers, and AmCham CEO Niels Marquardt following the first E&R committee meeting

Members from across the industry came together in Perth yesterday for the first meeting to set down goals and objectives for the committee in the coming months. With representation from major energy companies such as BP, Alcoa Australia, and Apache Australia among others, the committee will have its finger on the pulse of the energy and resources sector. Continue reading

Taking AmCham to the NEXT: level

Navigating your way through the business world as a young professional can sometimes seem a daunting task, especially if there are not many opportunities to meet others at the same stage of their career.

To support members just starting out (or anyone who considers themselves “young”) AmCham has developed a series of NEXT: Network for Young Professionals sessions. These events offer a forum where members can meet young professionals from outside of their company, as well as hear from speakers who have excelled in their field from as early as their 20s. To date, the events programme has included speakers from Google, LinkedIn, and Uber, with more planned for 2015. Continue reading