How not to make working people better off

Parts of my fourth research study into the operation of the Fair Work Act in the mining industry were released on the Weekend. From The Australian (login required):

MINING companies say the Fair Work Act has dramatically complicated agreement-making.

Some 63 per cent say it takes longer to strike deals under the Gillard government’s workplace laws.

As the industry urges an overhaul of the laws in the upcoming review of the act, it has released new findings from a three-year longitudinal study on their impact on the mining sector.

An analysis by RMIT University researcher Steven Kates found that about two-thirds of resource industry employers reported having to negotiate with more parties since the laws came into effect as unions engage in turf wars for members.

About 28 per cent complained of having to deal with the flow-on effects of lucrative oil and gas sector deals.

Only a union official would find any of this far greater difficulty in reaching agreement a move in the right direction:

The Construction Forestry Mining and Energy Union said the time taken to strike deals had risen under the Fair Work Act because employers could no longer hand workers non-negotiable statutory individual contracts, the Australian Workplace Agreements set up by the Howard government.

‘If their complaint is that Work Choices has been abolished, then that complaint is correct,’ CFMEU assistant secretary Dave Noonan said. ‘And what that means is workers are able to be represented by a union in a collective agreement.’

He said many employers in the sector were now dealing with unions for the first time, because there was previously no requirement to do so. ‘They were able to force workers to accept an AWA if they wanted the job,’ he said.

Anyone who thinks giving unions more power will make working people better off has no idea of what will really make working people better off.

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60 Responses to How not to make working people better off

  1. Not to diminish your academic expertise Steven or the value of your analyses, but why are we pretending? Unions are a form of organised crime syndicate that extorts money from end users via producers by increasing the cost labour/duration of projects/number of people required by means which anyone else on any other day would find grossly unfair if they weren’t clothed in the romantic narrative of the “struggle”. The ALP is their political arm.
    Have I made myself clear?

  2. Simon

    I was talking to a bloke on Friday who works in a copper mine. He said the ore they extract contains 4% gold. They ship the lot to India where because of the labour costs the gold pays for the entire operation both here and there, the copper is total profit. If it was processed here they wouldn’t be able to make a profit, they blame this on the unions and say Australia is missing out.

  3. .

    Which firm Simon?

    4% gold is pretty damned tasty for ore. Are you sure you heard right?

    You can get half an ounce of gold from a tonne in a typical quartz vein.

  4. kingsley

    Thank God unions are there now to suppport mine workers. We all know how hideously underpaid they all are. Despite a boom industry and the most extreme labour shortage in living memory those cunning mining companies continued to find a way to trick those naive innocent mine workers into working for bread and water. Why some get paid under $130K pa, they so clearly needed the help of a union

  5. squawkbox

    I work on a mine of the sort Simon describes. I think he means the partially processed copper concentrate they ship out is 4% gold. He’s right about the gold paying for the entire operation as well.

  6. squawkbox

    No, scratch that. About 40 grammes gold per tonne of copper concentrate is what I meant, or 0.004%. Still pays for everything.

  7. Simon & squawkbox, that’s an amazing fact.

    It’s such a shame, that the unionists can’t see how much richer they, and everyone else, would be, if they focussed on sharing a larger pie rather than fighting for all of a small one.

    The whole, and sole, raison d’etre of this government is to give the union movement whatever it wants. It’s so obvious. And so detrimental to the national interest. You’ll never read this in the press, of course.

  8. m0nty

    Those poor mining companies. The MRRT, the abolition of AWAs, they must be doing it really tough and investment must be shockingly bad.

    No wait, they’re still booming and making super profits! Whodathunkit. What happened to all that scaremongering by the Coalition about how the MRRT would cruel investment, anyway? Looks like a whole lot of pish and wind right now.

    If the contribution that the mining companies have to the national debate is merely whinging about how great AWAs were, they’re not going to have much effect. The CFMEU bloke can toss off dismissive one-liners like that with his eyes closed, it’s too easy.

  9. .

    Too bad if those arseholes go abroad monty. We have comparative advantage in resources – but not an absolute advantage, you uneducated swine.

    “The CFMEU bloke can toss off dismissive one-liners like that with his eyes closed, it’s too easy.”

    Whatever dickhead. You are drinking the Kool Aid if you think the CFMEU have a good reputation.

  10. m0nty

    The CFMEU don’t have a good rep, Dot, but even one of their mob can hit a home run if the mining industry lobs one over the plate like calling for the return of AWAs.

  11. .

    Did you read the comments on news articles regarding George from masterchef wanting a more liberalised workplace? The comments were in favour of a more liberalised workplace. The public didn’t vote for the abolition of AWAs – they voted to get rid of work choices. AWAs were popular and Howard won Government several times after their introduction.

  12. Neil

    What happened to all that scaremongering by the Coalition about how the MRRT would cruel investment, anyway?

    Mining tax is not law yet. It has to pass through the Senate. If it passes it will start on July 1, 2012.

  13. m0nty

    The public didn’t vote for the abolition of AWAs – they voted to get rid of work choices. AWAs were popular and Howard won Government several times after their introduction.

    I don’t think the public sees the difference any more. Good luck trying to explain the distinction.

  14. m0nty

    Mining tax is not law yet. It has to pass through the Senate. If it passes it will start on July 1, 2012.

    Yes, but investment in mining has long lead times, so if there really was going to be a drop off, it would have happened already.

  15. C.L.

    Just run a graph showing Keating unemployment, Howard unemployment and Gillard unemployment.

    Too easy, Campo.

  16. Monty, how do you know that it hasn’t already happened?

    Rising investment isn’t evidence that the tax hasn’t had an adverse effect. What you have to measure is how different the level of investment is after the introduction of the tax to parliament, compared to the level of investment that would have prevailed without the tax.

    I suspect investment is well down on what it otherwise would have been.

    Those resources aren’t any good to anyone, left in the ground.

    As for ‘super profits’, I suggest you go and study the concept ‘risk adjusted return’.

  17. squawkbox

    True, Monty, mining investments have long lead times. Think about that in the context of elections, and how long Gillard’s disastrous laws and regulations will last after 2013.

  18. .

    “I don’t think the public sees the difference any more. Good luck trying to explain the distinction.”

    Bollocks they KNOW the difference. They agree with the Masterchef. Unemployment under hoWARd was 3,9% WITH SIGNIFICANTLY LOWER TERMS OF TRADE

  19. .

    Dandy – monty is innumerate. Do you think he’ll grasp a vector autoregression? Do you think he could use the manual for E Views?

  20. m0nty

    Rising investment isn’t evidence that the tax hasn’t had an adverse effect. What you have to measure is how different the level of investment is after the introduction of the tax to parliament, compared to the level of investment that would have prevailed without the tax.

    True, but pretty damn hard to measure and even harder to demonstrate. Unless someone is able to produce a graph with a noticeable trendline flattening that Alan Kohler can babble on about on the news, this argument is a non sequitur.

    In any case, $300,000 salaries for operating mining equipment tells me (and the voters) there’s no drop off in the sector, and the Liberals were wrong. Examples like that would provide endless fodder for the Left in dampening any sympathy factor for the likes of Clive Palmer.

  21. .

    “True, but pretty damn hard to measure and even harder to demonstrate”

    Only because you are innumerate. There is no nice way of putting this.

  22. m0nty

    The problem, Dot, is you most likely can’t point at the graph and say with any authority that one single factor is why it looks the way it does. Unless there’s a noticeably sharp turn right around the date of the passing of the legislation, Labor will always be able to point to Europe, China or something else that also impacted.

    I would have thought passing the Senate was a formality at this point anyway, particularly given the 100% record of the government in passing legislation. I think the mining sector has factored the MRRT into its investment decisions already.

  23. .

    “The problem, Dot, is you most likely can’t point at the graph and say with any authority that one single factor is why it looks the way it does”

    Yes we can with enough data past the reference point.

    Fuck off and get an education.

  24. JC

    “True, but pretty damn hard to measure and even harder to demonstrate. Unless someone is able to produce a graph with a noticeable trendline flattening that Alan Kohler can babble on about on the news, this argument is a non sequitur.”

    No it’s not, you idiot. We know if you tax capital there will be less of it at the margin and economists are able to figure out estimates.

    STFU as you have no idea what you’re talking about.

  25. Skuter

    M0nty, here’s a hint for you: exploration expenditure…it will take some time to manifest itself. Total mining investment is too broad…

  26. m0nty

    Skuter: I look forward to hearing the results. I’m tipping the mining industry will breeze on regardless.

  27. .

    monty you fool the PRRT annihilated offshore mining and exploration for two decades. You are being complacent as a predator is grappling you and going for the killing bite through the neck. As we say “hilarious yet tragic”.

  28. JC

    “Skuter: I look forward to hearing the results. I’m tipping the mining industry will breeze on regardless.”

    First off it’s not your fucking land, Monster. The states are the ones which hold the rights to what is under the top soil. So if you live in Vic and not WA you have as much right as a freaking Chinese person to be calling ownerhsip like other left-wing retards.

    If you want to see a change, in that the Federal government owns the rights, then demand a referendum or otherwise get your greasy, envious mitts off the money as it isn’t yours.

    Secondly, you moron, tax always has an impact at the margin, so it may mean that through capital allocation decisions, development goes overseas. These decisions are very impersonal monster. A mining house has an internal cost of capital, so if a project in Buttfuck Africa or Buttfuck Canada offers a potential better EBIT that is where the money will flow.

    Lastly, why the fuck are you talking about this stuff when you’re basically an innumerate with no understanding of how capital allocation is made. Stay away please.

  29. JC

    No he isn’t being complacent at all Dot. He is a leftist innumerate, ideological shill who goes simply by what his party order. That’s all. Show him no respect not mercy.

  30. m0nty

    The states are the ones which hold the rights to what is under the top soil.

    I am glad that the power to tax miners is being diluted as far as the states are concerned. That sort of thing leads to competition between states, which enables rentseeking and freeriding by producers. You only need to look at the current car industry furore to see an example where states competing amongst themselves for the investment dollar can be ultimately harmful, as they tend to drop their strides and bend over way too easily for globalised industry these days. Major events are the same, that’s been a wheeze for decades now in Victoria.

  31. JoeN

    Further to your point JC, having worked on the commercial side in one of these companies, when developing projects one of the tools we used was the Internal Rate of Return or IRR. We would take tax into account in our financial models, and the IRR number it would spit out made it easy for senior management to work out where you place the shareholder’s capital for the best return.

    Capital would be allocated to the projects with the highest IRR. Of course other issues such as trapped cash etc come into play, but when you have to justify your project to get it signed off and to the next stage in the process the better the IRR the better your chances of progressing. (As you’re competing to get your project up against all the other projects in the pipeline.)

    And the array of projects in these companies tends to be quite international, which provides the company with options as to where it places its capital. This is particularly helpful when you’re dealing with, I don’t know, say a third world country that tends to suffer a bit of the old sovereign risk. (Sorry, that now applies to Australia thanks to the MRRT.) Swap out one project returning an XX% IRR and replace it with another, with a similar rate of return, somewhere else with less of that risk.

    Slowing down the allocation of capital to one country and ramping up another doesn’t take all that long in the great scheme of things from what I’ve seen.

  32. JC

    Monster:

    You truly are out of your depth.

    First and foremost we want to see competition between the states. Competition between the states is a good, not a bad thing over all.

    What is a bad thing is paying out subsidies for the stuff you mentioned.

    However dropping royalty rates is not a fucking subsidy, you ignoramus. It’s potentially competition if a state wants to attract investment over another. (Royalities have been going up by the way. Not down, you idiot).

    On the other hand a subsidy is paying out money to the car makers or attempting to attract stupid circus-like crap to the state.

    The bulk of the subsidies going to the car makers will be coming from the federal government and a only small fraction is coming from the states. So if you think the federal government is somehow virginal in these sorts of blatant stupid practices, you are one stupid or dishonest fucker.

    Having said all that, you really need to get it into your thick head that you have no ownership claims over mineral deposits as an Australian citizen. The states do and trying on a chavez like grab for cash won’t cut it unless you’re suggesting we simply ignore the constitution so the Alliance can steal the money.

    And you actually think the federal government would be incapable of offering differential rates to attract regional investment and potentially politicize the process. That’s impossible, right. Only the states can do that. Moron.

    Lastly please explain to me why it’s incumbent on WA to be stripped of it incoming royalties and the money sent packing to the failed state of Tasmania, which in the end continue to supports bad practices such as having 65% of the population on some sort of government welfare transfer while the voters continuing to vote job destroying greenslime. Why is that a more efficient use of WA’s money, Monster, you ignoramus.

    You’re really very “unbright” aren’t you. You have no head for this stuff. None monster, so stop trying.

  33. m0nty

    Nothing but abuse from JC as always.

    The crown retains mining rights on behalf of you and me as Australian citizens, be it state or federal. Stop lying through your teeth. You are an inveterate liar.

    Competition between the states benefits large corporations who have the funds to lobby for sweetheart deals. Arguing the toss over whether it’s a subsidy or a tax cut is immaterial, as the same effect happens: big companies get a free ride on services funded by taxpayers.

    The federal government needs to pay exactly zero attention to the mining companies when they whine about tax. Let Gina and Clive eat cake (well, maybe Clive should cut down a little). China is still ravenous for resources despite attempts at gloom, and we’ve got it by the truckload. No one needs a sweetheart deal to give them incentive to invest in Australian mining at the moment.

    WA can stop whining as well, they enjoyed government largesse for the best part of a century when they weren’t pulling their weight so they can shut up. As should you when you think of pushing that stupid line, JC.

    Same old tired, discredited talking points from Old Joe. Get some new material.

  34. .

    monty – you need some tutoring. The Crown in NSW is legally seperate to the Crown in the Commonwealth. The rights are held as Victorians, New South Welshmen, Queenslanders – not as Australian citizens save for the PRRT.

    “Competition between the states benefits large corporations who have the funds to lobby for sweetheart deals.”

    So let’s centralise everything and end up negotiating with RIO and BHP?

    Right….

  35. 2dogs

    “The crown retains mining rights on behalf of you and me as Australian citizens”.

    Only those in the territories. In states, the crown owns mineral rights in respect of the state.

  36. .

    “You only need to look at the current car industry furore to see an example where states competing amongst themselves for the investment dollar can be ultimately harmful”

    Only a misanthrope would say this after they back subsidies and then support the discouragement of investment.

    You are seriously out of your depth and have some pretty dire plans for your fellow Australians.

    You basically don’t understand you have a descending argument of second best arguments that spirals down to poverty.

  37. No Worries

    “I am glad that the power to tax miners is being diluted as far as the states are concerned.”

    Diluted ? Better read the MRRT policy. The basis of the tax is after royalties are deducted.
    You, who denounces the wicked competition between states, would rather competition between state and federal. Great plan NOT.

  38. Louis Hissink

    Super profitsd Monty? What planet are you living on – admittedly the accounting entity might be deemed to be earning a super profit, but the shareholders certainly don’t.

    It’s one of those fictions that cloud the debate – in fact public companies are basically mechanism by which some enrich themselves at the expense of others, shareholders and taxpayers being the ultimate owners. Public companies are a little different in that they are owned by some people, while government enterprises are owned by all the people.

    In both cases the owners are being ripped.

  39. m0nty

    admittedly the accounting entity might be deemed to be earning a super profit, but the shareholders certainly don’t.

    The taxes are not levied on the shareholders, but on the accounting entity.

  40. JC

    “The taxes are not levied on the shareholders, but on the accounting entity.”

    You idiot, the shareholders are paying for it as they own the firm.

    Mosnter, this stuff isn’t for you. Stick to dream footy as you’re not making any headway at all since you’ve been posting.

    I’ve seen no distinct improvement since you started to comment here.

  41. Winston Smith

    Monty is just being Contrarian. He chucks in anything that might support his argument, even if it’s superficial and wrong. He’s creating a zone of stupid which is becoming dense enough to collapse into a black hole of stupid.
    Then he will disappear up his own event horizon.

  42. .

    A: “How’s the business going?”

    B: “Doesn’t matter mate, it’s just an accounting entity!”

    A: “What about your mortgage?”

    B: “It’s just an accounting identity!”

    A “….”

  43. m0nty

    We’re in a federal system, Dot. Whether it’s the state or federal level of government makes no difference to the taxpayer, as they pay tax the same way to both levels (i.e. with Australian dollars). An Australian taxpayer is going to have much the same tax burden as everyone else in the country, save for relatively minor differences his or her state.

    Constitutional arguments over federalist technicalities are rather esoteric and meaningless in the long run, because at some point either the state or federal level was going to do this to fund baby boomer retirement entitlements, as the mining sector is the fattest target.

    Rio and BHP seem to value certainty over a percent here and there in the outcome, not surprising since they are public companies which makes them focused strongly on their share price. BHP and Rio haven’t been saying boo since the deal was done, and their share prices have both gone up.

  44. JC

    “Rio and BHP seem to value certainty over a percent here and there in the outcome,”

    In a just world you would get 10 year hard labor for uttering such stupidity.. and there would be no possibility of parole either.

  45. JC

    Dickhead, Monster

    The first attempt at thieving when the mining theft tax (MTT) was announced the marginal tax rate would have moved from around 43% to 57%. That wasn’t 1% here or there, you dummy. But hey, it provided certainty lol. Lots of it.

  46. .

    ” Dot. Whether it’s the state or federal level of government makes no difference to the taxpayer”

    Yes it does. Increasing centralisation that is becoming increasingly inefficient means they are paying more taxes for less services.

    “because at some point either the state or federal level was going to do this to fund baby boomer retirement entitlements”

    It was being done through company tax.

    Swan, the interminable cretin, blurted out that the MRRT was to cover the 12% super increase and pay for the stimulus (which wasn’t going to provide enough growth to make up in taxation). Rudd promptly got handlers to shut him the hell up.

    “Rio and BHP seem to value certainty over a percent here”

    You are implying that the possibility of a tax not being imposed reduces the present value of their projects. This is nonsense.

    Expected values are what matter. BHP and RIO gamed Gillard to reduce their tax bill. Ever think why gold (truly a super profit tax commodity right now if there ever was one) is exempt?

  47. JC

    “You are implying that the possibility of a tax not being imposed reduces the present value of their projects. This is nonsense. ”

    The level of stupid is reaching unimaginable heights. I think he’s going to spit the dummy and not post any more comments.

  48. m0nty

    You’re projecting as usual, JC. You’re the angry one here, judging from the torrent of abuse. Nup, you’re stuck with me.

  49. JC

    Monster:

    I’m not angry. Promise. It’s just that you’re attempt to explore new heights of stupidity leaves me a little shaken at times. Either that or you’re an extremely dishonest fat headed child.

    Please remember I did warn you the nice guy image I tried hard to project in 2011 was gone in 2012. No more Mr. Nice Guy. Recall?

  50. m0nty

    You are implying that the possibility of a tax not being imposed reduces the present value of their projects. This is nonsense.

    No Dot, I am implying that once the level of tax is made known, markets have better information as to the value of those projects, and thus can devise a more confident valuation for the company which is based on sounder assumptions. Which is what has happened, with both Rio and BHP share prices rising since the legislation passed the House in late November. Obviously the uncertainty over the MRRT was impacting on those shares, and now much of the uncertainty has lifted.

    As for you JC, you should concentrate more on your appearances at Troppo, as I see you’ve had your botty smacked over there in the last couple of days. Not so easy when you’re outnumbered and on someone else’s turf, is it?

  51. JC

    “No Dot, I am implying that once the level of tax is made known, markets have better information as to the value of those projects, and thus can devise a more confident valuation for the company which is based on sounder assumptions. Which is what has happened, with both Rio and BHP share prices rising since the legislation passed the House in late November. Obviously the uncertainty over the MRRT was impacting on those shares, and now much of the uncertainty has lifted.”

    Duckhead, the impact was known well in advance. The stock has fallen from 48 bucks to 35ish.

    “As for you JC, you should concentrate more on your appearances at Troppo, as I see you’ve had your botty smacked over there in the last couple of days. Not so easy when you’re outnumbered and on someone else’s turf, is it?”

    I will behave as i choose to behave, Monster. I you think you will be getting a free pass for any level of stupid, keep dreaming.

    As for getting my arse kicked… Yea right. Don is all for free markets until it gets to heathcare.

    As for the others… you mean like wodge has put up decent arguments? Lol

  52. .

    Yes you are monty, no matter how you spin it.

    Do you even know what “expected value” means?

  53. m0nty

    JC, I suppose it’s too much to expect you to be lucid over here after Dan and desipis ganged up on you. You must still be bleeding from the knifing they gave you.

  54. JC

    Monster,

    you’re so pathetically tribal. I’m almost embarrassed for you.

  55. m0nty

    LOL, says JC who is supporting Romney. You sound funny when you hold your nose while you’re talking.

  56. JC

    “LOL, says JC who is supporting Romney. You sound funny when you hold your nose while you’re talking.”

    Huh? And this is supposed to be a refutation that you’re a tribalist doofus?

    Incredibly, you lower the stupid bar every time you post a comment, Monster.

  57. twostix

    The crown retains mining rights on behalf of you and me as Australian citizens, be it state or federal. Stop lying through your teeth. You are an inveterate liar.

    I see you still haven’t withdrawn this woefully embarrassingly and ignorant comment despite being thumped over the head with it twice.

    So the question is why are you attempting to now pass yourself off as an economist and attempting to convince us all (with fifth grade understanding of the Australian system) that the democratically elected state governments can not be trusted with their own property so the undemocratically “elected” federal government that purchased its way into power should simply take them…because it wants to.

    Over the last 3 months you’ve turned extremely bitter m0nt old man, you used to be cool, what happened?

  58. m0nty

    May I remind you, 26, that minority governments are much more prevalent in states than in the federal level. The number of state minority governments is in double figures over the last 20 years.

    The crown retains mining rights in Australian law. Australian citizens are subject to Australian law. The crown is the representative of the citizenry. Whether the actual government body to whom the rights accrue is at state or federal level makes no difference to the fact that as an Australian citizen, I share in ownership of our country’s mineral resources.

    If nitpicking technicalities are the best you lot can do by way of argument, it doesn’t bode well for the right’s prospects to advance their case in 2012. Where were you lot when Joe Hockey needed some support in talking up cutting subsidies to the car industry? Where was the IPA? “No answer,” came the stern reply.

  59. m0nty

    JC, you’re so tribalist for the GOP that you’d even support Romney. How you can live with yourself I don’t know. He’s the Turnbull of America.

    Oh that’s right, you liked Turnbull too. Bit of a weird one, you are.

  60. twostix

    The crown retains mining rights in Australian law. Australian citizens are subject to Australian law. The crown is the representative of the citizenry. Whether the actual government body to whom the rights accrue is at state or federal level makes no difference to the fact that as an Australian citizen, I share in ownership of our country’s mineral resources.

    M0nty, you don’t even know what “The Crown” is do you? You literally have no understanding of the system of governance under which you live and your falling over yourself in some sort of semi-comedic three stooges act trying to backpedal and “convince” everyone that your very odd take on the Australian system of governance is reality.

    Here’s a hint for you though: Come to NSW, bring your Victorian Fishing License and try and tell NSW fisheries that you’re an “Australian Citizen” and the fact that the NSW Crown owns the inland lakes and everything that swims inside them is an irrelevant “minor constitutional technicality” compared with your grand “Australian Citizenship”.

    Then watch as he laughs and slaps you with a big fat fine.

    Then go the the Australian High Court and attempt to even get a hearing on the matter.

    You clown.

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