Workplace relations: new government and Aust's industries Part 2

Read 'Energy and resources: new government and Australia's industries - Part 1'

Workplace relations

The Labor Party and the Coalition had starkly different workplace relations policies throughout the election. Labor proposed a hands-on approach, aiming to actively create jobs, with an emphasis on the manufacturing sector. Providing subsidies to the automotive industry and regulating work for Australian businesses in large projects formed the core of Labor's policies. The Coalition proposed reforms to workplace regulations that would encourage hiring and would reduce subsidies to uncompetitive industries.

The Coalition's workplace relations reforms are likely to be aimed at a long-term overhaul of Australian work standards. While Labor's policies would have had a more immediate effect on employment, the Coalition's intended removal of regulatory restrictions on employment growth and business development will be cheaper and more sustainable in the long term than subsidies and regulation. If the Coalition successfully repeals the carbon tax, both direct and indirect costs for Australian firms will also drop, allowing businesses to compete more effectively internationally.

The Coalition is anticipated to create an economy-wide shift in workplace relations. The reinstatement of the Australian Building and Construction Commission, which is widely regarded as a union counterbalance, will reintroduce fines used to prevent misconduct of unions and union officials. The Commission will also aim to rewrite the National Construction Code to grant building approvals more easily.

This move is anticipated to counteract the Construction, Forestry, Mining and Energy Union's power. Other union related policies include the lessening of 'union-friendly' workplace arrangements for government projects, such as public infrastructure construction.

This would further weaken government ties with unions, especially as the Coalition proposes limitations on union negotiations for new projects. Right of entry laws are also likely to revert to old Coalition policies that restrict access to construction sites with non-union enterprise agreements.

The Abbott government has proposed a new Paid Parental Leave Scheme from 1 July 2015. This scheme consists of 26 weeks of paid leave for the primary caregiver at a replacement wage or minimum wage (whichever is larger), to a maximum wage of $150,000 per annum.

Secondary caregivers are eligible to take two of those weeks at the same wage rate. The aim of the scheme is to encourage primary caregivers to both enter and stay in the workforce. The length of the scheme will also reduce the need to work immediately following the birth of a child. This will increase the overall spending power of affected parents, and the sale of baby products is expected to rise as a result. However, there has been widespread opposition to the cost of the policy, and questioning of whether it is fair to pay primary caregivers different levels of income. The policy will be partially paid for by a 1.5 per cent Paid Parental Leave levy on firms earning more than $5 million in taxable income, which means the effective tax rate for those companies will remain the same following the company tax cut. This may negatively affect firms that have to pay more tax relative to other companies.

Additionally, the Coalition intends to delay superannuation contribution increases by two years, with the first incremental rise from 9.25 per cent to 9.5 per cent planned for 1 July 2016. Incremental rises will be progressively implemented to reach 12 per cent superannuation contribution by 2021-22. The superannuation increases are expected to eat into future wage increases or company profit, so delaying the increase will allow businesses more breathing room with cost structures and will ultimately mean higher earnings after tax for employees.

In light of these workplace relation reforms, IBISWorld forecasts average weekly earnings (as a measure of economy-wide income) will increase at an annualised 4.3 per cent over the three years through 2016-17, marking an upward trajectory of income taken home during this governmental cycle.