The world’s biggest dairy exporter has backed a review of penalty rates to make Australian food makers more competitive globally and farmers more profitable.
Fonterra Australia managing director Judith Swales wants greater flexibility on employee conditions, suggesting a similar model to New Zealand where work hours correlated with seasonal milk supply.
»Essentially you are not legislating that people have to work 38 hours a week, 48 weeks a year,» she said. »They can work longer hours without penalty [during peak supply periods] but then they get time off either side of the peak.
»It’s more flexible, it’s more in keeping with nature as opposed to forcing it for labour rules.»
But the Australian Council of Trade Unions president Ged Kearney warned while cutting penalty rates could increase profit, it could also curb productivity through a »disenfranchised and demotivated» workforce.
The federal Coalition government is set to introduce legislation that will allow employees to bargain away entitlements such as penalty rates on the proviso they are better off overall.
Fonterra employs about 2000 people in Australia, processing about 20 per cent of the national milk supply.
Ms Swales said Australia would not be able to follow the New Zealand model completely, because local plants produced more fresh milk and products with a shorter shelf life.
»But I think more flexibility, not to disadvantage people but to make us more competitive, is kind of the name of the game.
»If we want to be serious players on a global scale we have to have seriously competitive and efficient manufacturing operations.
»You could argue it’s one of the issues for car manufacturing. We didn’t have a globally competitive manufacturing cost base in terms of some of the enterprise agreements and maybe some of the technology. In dairy we are no different.»
Ms Swales, who was appointed to Fonterra’s Australian top job last April, said her biggest priority was to make dairy farming more appealing, and workplace reform was a starting point.
Despite the frenzy surrounding the global bidding war for Warrnambool Cheese & Butter, Australia’s milk processors are running on average at 70-75 per cent capacity.
Milk supply has fallen almost 20per cent in the past decade, from about 11.2 billion litres to 9 billion litres a year.
In the same time New Zealand, where Fonterra is based, has almost doubled its supply to about 17 billion litres a year. Combined with a lower exchange rate and the signing of a free trade agreement with China in 2008 has helped New Zealand secure a greater slice of the Asian agriculture boom.
Australia exported $389 million worth of dairy products to China in 2011-12, compared with New Zealand’s $NZ2.1 billion ($1.94 billion).
Ms Swales suggested a review of penalty rates for casual labour on dairy farms and greater access to 457 visas to help increase Australia’s milk supply.
Australian Dairy Farmers president Noel Campbell said penalty rates did not have to be removed entirely.
»We are not specifically saying that penalty rates need to be removed. We’re saying that there needs to be flexibility,» he said.
»Under the pastoral award rate, if you are feeding or watering stock you only have to pay time-and-a-half because that’s seen as an essential service. I’m sure cows would think being milked is an essential service and I’m sure if the RSPCA was asked about it they’d say cows needed to be milked twice a day no matter if it’s a Sunday or Tuesday.
»Therefore we think it should become an essential service and the penalty rates would be time-and-a-half rather than double time.»
Mr Campbell said red tape around applying for 457 visas needed to be cut, saying most farmers found the application process too onerous.
But Ms Kearney said cheap foreign labour could decrease milk production.
»You do not increase productivity by increasing profit. They are two different things,» she said.
»Employing cheaper labour or imported labour … could decrease the amount of milk you produce because people don’t understand the industry, they’re less motivated, they don’t want to be there because they’re not getting penalty rates.»
Source: SMH
