The Abbott Government has told oil and gas giants to risk delaying multibillion-dollar projects off WA rather than agree to extravagant union claims.
In a new front on the Government's war with unions, Employment Minister Eric Abetz told The West Australian it was vital for the long-term interests of the nation that employers did not surrender to union tactics.
Senator Abetz's comments came as the coalition confirmed it would order a wide-ranging royal commission into the activities of unions, which Labor and union leaders have described as a politically motivated witch-hunt.
Senator Abetz said oil and gas companies should, in their negotiations with unions, consider the "long-term consequences of the next project" by taking some "short-term pain".
"Some of the employers do argue that it is very difficult when you've got a stash of capital in the corner which is costing you big, big dollars in interest or forgone dividends when these extravagant wage claims are made," he said.
"They then do an analysis and it's easier and cheaper to give in to the wage demands in comparison to the interest or forgone dividends you are burning. If you look at the long-term picture one might come to the conclusion some short-term pain will in fact be a long-term gain."
Asked what he meant by short-term pain, Senator Abetz said: "It means that a project does not get started as quickly as it otherwise might."
He said the Government would help companies by amending the law to allow the Fair Work Commission to arbitrate on negotiations in greenfield projects, if unions and employers could not agree on wages and conditions within three months.
Major oil and gas companies contacted by The West Australian declined to comment to avoid inflaming talks with unions.
Australian Mines and Metals Association policy director Scott Barklamb said the coalition inherited an industrial relations system that skewed bargaining in unions' favour.
Construction, Forestry, Mining and Energy Union State secretary Mick Buchan said harsh working conditions and risks involved in working on offshore rigs, plus the long periods away from family, had to be recognised.