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Higher labour hire pay threatens viability: Qantas, BHP

Unions and major companies are going head to head over proposed labour hire laws, with the latter arguing higher pay rates will threaten business viability.

Qantas and mining giant BHP have rejected new laws to close labour hire loopholes as a threat to their businesses, but unions argue the changes are necessary to stop workers' pay being undercut.

The "same work, same pay" legislation would stop employers from negotiating an agreement with workers and then paying labour hire lower rates for the same job.

Increased wages for some workers would sink the airline, Qantas executive Nathan Safe said on Tuesday.

The fact Qantas was already the highest-paying airline in the country was also overlooked, he told a Senate committee examining the draft laws.

"Qantas is also a legacy business, operating in a highly competitive global market with low barriers to entry for new competitors," he told a hearing in Bundaberg.

"For most legacy carriers, failing to adapt to this reality has not ended well. That's why we have evolved our labour model over several decades."

Of the more than 27,000 people the Qantas group employs, 95 per cent are directly employed - the majority of which are under enterprise agreements and individual contracts.

"The 'same job, same pay' reforms could - depending on decisions left to the Fair Work Commission - significantly increase costs with no increase in productivity," Mr Safe said.

"That could, in turn ... undermine job security and create market distortion, by way of an unlevel playing field in circumstances where our competitors will not be captured by the proposed reforms."

He defended the tens of millions of dollars the CEO is paid - including in bonuses - saying it was signed off by shareholders and that executives more broadly "generally don't enjoy some of the protections that (enterprise bargaining agreement) staff do".

Labour hire was used to undermine the terms and conditions of employment at mines with hired workers seen as cheap labour, the Mining and Energy Union said.

But BHP argued the new laws would put undue costs on employers, increase operating costs without boosting productivity and therefore lead to inflation.

They would also undermine investment in the sector at a critical time, government relations vice president Nick Park said.

"Labour costs have doubled since 2000 despite labour productivity remaining flat" he told the committee.

The bill would make the sector a more expensive, less productive and less competitive place to do business "at a time when Australia should be in the box seat to deliver the minerals needed for the global energy transition", Mr Park said.

An opaque definition of what "same job, same pay" is also added to the complexity of implementing the changes on top of current industrial relations laws, he said.

Of BHP's 35,000 nationwide workforce, 8000 are labour hires.

The Electrical Trades Union's Trevor Gauld agreed the complexity made the Fair Work Act "a Frankenstein of an Act" but said the changes to labour hire laws were sensible and meaningful.

The fact BHP said it would cost their bottom line over $1 billion was an admission they had been underpaying workers, the mining union's Mitch Hughes said.

BHP argued the company's program to boost Indigenous and female employment would be "unfeasible" by adding additional costs.

Labor senator Linda White said the claim read as BHP admitting it would only hire women and Indigenous people if it could pay them less than the men on the main enterprise agreement.

"When you make a profit of $US12.9 billion, saying that paying your workers fairly will have to come at the expense of your female workforce and your Indigenous workforce, it's pretty disgraceful, isn't it?"

BHP officials disagreed, saying the program was designed to increase workforce diversity.


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