Industrial Relations: The Inside story of the secret ‘same job, same’ deal that divided the mining sector

New documents have pulled back the curtain on the backroom deal on Labor’s contentious “same job, same pay” scheme that ignited a civil war in the mining sector.

The West Australian has obtained a tranche of letters and emails that reveal how the Australian Resources & Energy Employer Association (AREEA) worked behind the scenes with Workplace Relations Minister Tony Burke on an agreement to exempt service contractors.

The documents – released under freedom of information – show AREEA was desperate to ensure the exemption was water-tight to head off the prospect of unnamed “stakeholders” pulling apart the deal and making it look “silly”.

The agreement caused a major rift in the industry, with the Minerals Council of Australia describing it as an attempt to “hoodwink the Parliament and the public” and warning it would still leave contractor businesses exposed to pay orders that could send them broke.

AREEA boss Steve Knott defended the deal when contacted by The West Australian, arguing the impact to WA’s resource and energy sector would have been “enormous” had it not been struck.

The threat of contractors such as caterers and construction teams being captured under the “same job, same pay” scheme for labour hire emerged as the mining sector’s biggest concern with the Federal Government’s Closing Loopholes Bill.

The sector feared the laws could bankrupt businesses, stalling the mining projects that relied on their specialist services.

AREEA led a delegation of members to meet with Mr Burke in early June to air their concerns and pitch the idea of using a “multi-factor” test to carve out genuine contractors.

In a post-meeting letter to Mr Burke on June 9, the group warned of dire consequences if contractor businesses were caught up.

“It is not an exaggeration to forecast that such an outcome could be devastating for contracting business … employers providing highly paid work, training and upskilling opportunities for many thousands of Australians,” the letter read.

In the following months, AREEA joined other leading employer groups in publicly denouncing the Bill and lobbying MPs and Senators to oppose it.

The West understands its position shifted after meetings with key Senate crossbenchers David Pocock and Jacqui Lambie left it in no doubt the “same job, same pay” provision would pass parliament.

The group’s focus turned to secretly brokering a deal with the Government, putting it at odds with the other business groups who remained staunchly opposed.

The documents show AREEA emailed Mr Burke’s office on November 14, setting out a list of “red line issue” that needed to be addressed before it could endorse the Bill.

Negotiations must have been well advanced because just one day later AREEA emailed the minister’s office again with a draft media statement it planned to publish once the deal was agreed.

The draft statement - which included the caveat that it was “subject to ongoing negotiations with the Government” - ran under the headline: ‘Service contractors exempted from labour hire laws”.

Emails show that over subsequent days AREEA pressed for more last-minute technical tweaks after legal experts poured over the drafting of the proposed exemption.

The group was adamant the outstanding issues needed to be fixed to back up the “firm language” in its media statement that an exemption had indeed been “delivered”.

It was also keen to shield the deal - and itself - from potential criticism from other groups.

“These technical drafting issues are very important to clear up – if not they will be exactly the sort of things ‘other stakeholders’ will pull apart to try and make us look silly and our solution ineffective,” a November 17 email read.

“We trust these can be reflected in drafting available for us to view early next week.”

The deal was reached on November 21 with Mr Burke’s office emailing AREEA to confirm the agreed changes to the Bill.

The news broke later that night with Mr Burke and Mr Knott heralding the deal as a major win.

Minerals Council of Australia chief executive Tania Constable was deriding the agreement within hours, insisting contractors would still have to “litigate their way out” of the new regime.

Gina Rinehart’s Roy Hill – itself an AREEA member – also publicly attacked the purported exemption in a rare rebuke of its own peak body.

ARREA’s political judgment ultimately proved correct as the crossbenchers teamed up with Labor to rush through the changes in parliament’s final sitting week of 2023.

Mr Knott continues to stand by the deal, confident the amendment will protect “genuine” service contractors.

“AREEA’s amendments mean the Fair Work Commission (FWC) is required to determine, as a threshold issue, whether an arrangement is for a service or for labour hire,” he said.

“Where it is found to be for a service, the FWC is prevented from making a “same job same pay” order.”

Asked to explain why he agreed to the deal, Mr Burke said AREEA “convinced me of the merits of their case”.

“They made sure I was aware how service contractors are the backbone of so much of the resources industry in WA and how their work differs from that of a labour hire firm.”