Union boss wrong on big pay for labourers

If Kevin Reynolds doesn't ring the newspaper with a tirade of abuse after he reads this column then the union hard nut has clearly lost his edge.

The likely source of Mr Reynolds' anger will be the suggestion that there is no way labourers should be earning $130,000 a year, which is what they will be paid under a new deal between the Construction, Forestry, Mining and Energy Union and Brookfield Multiplex.

Mr Reynolds says that modern labouring is more than just pushing a broom and points out that you have to work much longer than 40 hours a week to get that kind of money.

But even after considering the (apparently) under-appreciated technical skills involved in labouring and the longer hours, it is fair to ask whether a shift on a building site is more demanding than a day on the beat as a cop, in an emergency department as( a nurse or in front of a classroom as( a teacher.

This new pay deal means a labourer working for Multiplex will earn almost $54,000 more than the 2011 salary of a senior constable who has spent eight years dealing with the kind of traumatic scenes most of us, thankfully, will not experience.

He, and occasionally she, will earn $48,000 more than a teacher who has eight years experience.

And the labourer will earn almost double the salary of a nurse who has spent nearly a decade coping with the blood and despair in our public hospitals.

Len Buckeridge, the construction baron who is one of the few men in WA able to go pound-for-pound with Mr Reynolds in the vitriol stakes, said the deal allowed "morons" who left school at 14 to earn more than some doctors.

That is a bit extreme but the fact is there will be more than a few labourers on more than a few building sites earning a lot more than well-qualified and experienced professionals.

The union pay deal was reported on page seven of last Tuesday's edition of The West Australian.

On page six, barely 15cm away from the smiling faces of some of the men lucky enough to win the 5 per cent increase each year for three years, was a story about how the $30 billion gas processing precinct to be built north of Broome would be delayed because of concerns about rising costs.

A week earlier there was a report on page six about how the first day of Sunday Christmas trading was tough for retailers because of the high penalty rates they had to pay staff.

Rewind another week and there was a story on page 28 in which Rio Tinto chief executive Tom Albanese said the mining giant was paying its Australian workers twice as much as its US employees.

And a week before Mr Albanese flagged concerns about the productivity of the local workforce, a story on page 91 detailed how a Gillard Government advisory forum met at the Duxton Hotel to work out why resources companies were not sourcing more material from WA steel fabricators.

All those stories relate to high wages but it is the last report - the one about "local content" - that is the real rub.

When anyone dares to suggest that recent collective negotiations are unsustainable, union leaders wheel out cliches about how international manufacturing competiveness should not be based on a "race to the bottom".

This argument overlooks one fact: cost is a major factor in determining whether material and equipment used in Australian resource projects are made in this country or come from Asia.

The same market forces that allow a labourer to earn $130,000 a year should allow resource companies to buy from whichever supplier offers the best deal.

Unions aren't alone in trying to have a bet each way on economic theory. National retailers use the demand argument to justify the damage they inflict on smaller traders but quickly drop any mention of market forces when they beg governments to protect them against online competitors.

Excessive union pay claims will hurt this country more than the questionable actions of some businesses. Robust corporate profit margins have disguised absurd wage rises but some time in the next few years we will realise we were living in a fool's paradise when we thought China could defy centuries of economic wisdom to grow at 10 per cent for decades on end.

When that happens there are going to be a lot of people who are going to have to get used to the idea that if you push a broom around a building site you aren't going to be able to afford to drive a brand-new, high-performance ute.

You can bet that when the tide turns unions will be screaming it's unfair for employers to use high unemployment rates to drive down wages.

That's assuming they aren't hoarse from yelling about how terrible it is that local manufacturers can't get work on the big resources projects.

I don't know whether Mr Reynolds left school at 14. I do know he is not a moron. Which is why his stand is all the more breathtaking.