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From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

Pay for cooks shows IR madness

Thursday, May 09, 2013

 If there is a single example that the Australian industrial relations system has lost all balance and common sense, it's in the pay rates to cooks working on ships involved in the oil and gas industries. The cooks are on a $230,000 package for a rotating roster and they effectively work only six months a year.

It's a great gig if you can get it, organised and enforced by the Maritime Union of Australia. This is the MUA's definition of workers' "rights". It would certainly buy the union loyalty of cooks and other ship workers under the MUA's 2013 pattern agreement.

Of course, the flipside is the damage done to every other Australian worker not so lucky to be on the MUA gravy train. Just a few weeks ago Woodside announced the cancellation of its $45 billion planned investment in the James Price Point gas project in Western Australia. That's $45bn now not being spent creating new jobs, export income and additional taxes to benefit all Australians.

Woodside explained that the main reason for cancelling the project was cost blowouts. That's not surprising. According to Minerals Council of Australia figures, in 2007 it was cheaper to build a new thermal coal mine in Australia than the average cost around the world; Australia is now 66 per cent more expensive. These sorts of enormous cost increases are common in the sector.

The result is the resource-boom tap is being turned off. Projects that started before the killer cost increases are continuing. Most other projects are being frozen.

Australia's heavily distorted industrial relations system carries a large part of the blame; a rigged system in which businesses are pressured into killer agreements. But blame also rests with industrial relations executives in big companies and industry associations who lack any strategic capacity to organise sensible deals.

And it is common sense that's been thrown away. To the average worker earning $70,000 a year, $230,000 for six months' work is a dream. To most, the MUA cook's pay is a fantasy.

Yes, it's understandable that more has to be paid to attract workers to remote and harsh work locations. But a package that's six times the average income is an industrial relations system gone mad.

But it's not just the massive pay rates for the privileged elite. (Yes an MUA cook is now an elite!) The agreements remove any capacity for good management. The union has effective control of workers' leave, crew lists, rosters and manning. Work days have been reduced from 12 to 10 hours.

It's an outcome that should make ordinary Australians angry. The industrial relations system creates wealth for a privileged few. This destroys the ability of all Australians to share the wealth potential of our country.
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