While the Productivity Commission’s (PC) final report into Australia’s workplace relations system makes a number of sensible recommendations, its apparent willingness to settle for second best risks blunting the case for reform.

In concluding that Australia’s workplace relations system is ‘not dysfunctional’ and our labour market performance and flexibility is ‘relatively good by global standards’, the PC sets the bar too low.

The ability to adapt to changing market conditions and to do things differently – including through new ways of organising work – is essential to globally competitive industries including the minerals sector.

Yet what the PC describes as the ‘clunkiness’ of the system is a formidable barrier to the agility and flexibility of Australian businesses.

The PC report does, however make a number of important recommendations.

The PC’s proposal of a new employment instrument – an ‘enterprise contract’ – to allow businesses to vary awards to suit their operations will help address the rigidities of the existing regime.

The minerals industry supports the PC’s recommendation that an enterprise agreement may only contain terms about permitted matters – and that this should not extend to the relationship between employer associations and trade unions.

The PC’s recommendations to facilitate greenfields agreements and to increase penalties for unlawful industrial action by three times the current level are also sound.

Further, the minerals industry welcomes the PC’s recommendations to reform transfer of business provisions to provide greater incentive for new employers to take on employees from the previous employer.

In our view, a more ambitious workplace reform agenda is warranted. A recent survey of MCA members found that addressing Australia’s workplace relations framework is a policy priority second only to approvals processes (and equal to taxation and royalties).

The minerals sector was the largest industry contributor to Australia’s economic growth in the September quarter, accounting for almost half (0.4 percentage points) of the 0.9 per cent growth rate.

Australia’s comparative advantage in minerals has been maintained despite tough market conditions and will continue to be hard won.

Workplace relations policy must be assessed through the critical lens of international competitiveness, productivity and innovation.

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