31 March 2015
Opinion piece written by Mike Henry, BHP Billiton President - Coal, published in the Australian Financial Review.
Australia’s economic success has been achieved through productivity growth and the unlocking of our resource potential by way of exports. This has been good for shareholders and employees. Australian businesses have climbed global league tables and Australia’s GDP per capita has risen to sixth amongst OECD countries. We can be proud of this. Our growth has been achieved on the back of capital from shareholders and the ingenuity, capability and effort of Australian workers. As productivity grew, businesses became more profitable, they invested more capital and hired more people, employees’ earnings increased and their work became both safer and more fulfilling.
But where to from here? Our reliance on exports means our prosperity is underpinned by our ability to compete globally. BHP Billiton faces this every day. Our sales compete in global markets, head to head with supply from other countries. Competition isn’t getting easier. In our Coal Business, in spite of having embedded US$2.4 billion in annualised productivity and cost savings recently, in the last half we generated only a 2% return on capital and we actually lost ground relative to many of our global competitors. The competition is fierce. Prices continue to fall.
Employers and employees have a shared interest in coming together to tackle our collective challenge. A well-functioning workplace relations framework will support our ability to stay ahead of the global pack, thereby continuing to improve outcomes for business, shareholders, employees and the nation.
Our Productivity Commission submission advocates for a small set of amendments to the framework. Whilst in due course, we support a dialogue on what is required to ensure that the framework evolves to address the challenges posed in the Intergenerational Report, to keep pace with Australia’s competitors and to offer even better long-term employment prospects for Australians, we must urgently address some shortcomings in the framework. Left unchecked they undermine our ability to improve productivity and stay ahead of our global competition. This starts with the passage of reforms already before Parliament, including restoring balance to right of entry provisions and providing greater investment certainty through greenfields agreements. Also, the focusing of enterprise agreements onto terms of employment only, equally supporting union and non-union streams of bargaining, restoring limits on adverse action claims and ensuring balance in the way that the right to protected industrial action is applied and the relief that can be sought.
The current provisions undermine our competitiveness by exacerbating the impact of industrial conflict and by creating fear that holds parties back from sensible productivity improving practices.
One example is the negotiation of BHP Billiton’s BMA joint venture’s primary enterprise agreement concluded in 2012 after 22 months of industrial action - painful for the business and our people. Such incidents impede Australia’s competitiveness and our reputation as a reliable supplier. Customers need reliable and economic supply, so events like this leave Australia vulnerable to losing market share. This occurred in the metallurgical coal market in 2012 and we continue to suffer the effects today, with supply from competing countries proving difficult to dislodge, extending the period of low prices.
BHP Billiton is committed to having a work environment where employees are able to work safely and where they feel challenged, recognised and fulfilled. We all have a shared interest in improving productivity and ensuring that Australia remains a strong competitor in global markets. Through this we can ensure we continue to drive economic strength and increased living standards. We need a workplace relations framework that fosters an environment in which employers and employees come together to achieve this shared aspiration.