Australian Economy Dodges Near Crisis After Major Industrial Action Averted

Tugboats guide a long ship through Newcastle Port in Newcastle, Australia, on July 30, 2015. Cameron Spencer/Getty Images

The Australian economy managed to dodge a bullet after the industrial relations umpire stepped in to order the country’s largest tugboat operator to suspend a planned lockout of workers.

On Nov. 17, the Fair Work Commission ruled that Svitzer’s plan to lock out half its workforce indefinitely would cause severe damage to the economy and put the welfare of the population at risk.

The Commission ordered Svitzer to suspend lockout plans for six months, starting from 11 a.m. Australian EST on Nov. 18.

As a direct result of the order, neither the company nor unions can take industrial action during the period.

The Potential Adverse Impacts of the Lockout

The Commission’s decision comes after the Danish tugboat operator announced on Nov. 14 that it would suspend around 590 workers across 17 ports in Australia indefinitely due to a three-year wage dispute with unions.

The announcement sparked concerns among politicians, economists, business leaders and the like due to its significant impact on supply chains.

In a submission to the Fair Work Commission, financial services firm HoustonKemp said the lockout would cause delays to the schedules of vessels arriving or departing from the ports.

There would also be losses or significant reductions in the value of time-sensitive goods, as well as other costs arising from the delays.

Tugboats guide a bulk carrier ship through Newcastle Port in Newcastle, Australia, on July 30, 2015. Cameron Spencer/Getty Images

General manager of New South Wales Ports, Julian Sefton, told the Commission that the extra costs caused by the suspension of tugboat services would be passed on to Australian customers, which in turn, would fuel inflation.

HoustonKemp also noted that the adverse impacts would worsen and compound with each day the lockout continued.

Meanwhile, Workplace Relations Minister Tony Burke said he was devastated by the way the dispute unfolded.

“It doesn’t just affect the people at work there. It affects the people at the ports. It affects truck drivers. It affects people at the warehouses,” he told 2GB radio.

“Ultimately, you end up shopping at Christmas time, and what you need on the shelf isn’t there.”

Svitzer’s Response to Fair Work Decision

Following the ruling, Svitzer announced that it would not go ahead with the planned lockout.

“The lockout will not proceed, and customers can return to planned shipping movements and recommence port operations,” Svitzer said in a statement.

The company later added that there might be some minor disruptions around ports on Nov. 18 as maritime unions demonstrated at multiple locations around Australia.

However, some damage was already done as port operators reported that ships carrying consumer goods, fuel, and pharmaceuticals had scrapped plans to dock at Australian ports in the wake of Svitzer’s announcement, despite the intervention of the Commission.

Michael Sousa, director of logistics firm Qube, told the Commission that most ships were not going to dock at the time of the hearing.

“We’re not expecting any ships to berth tomorrow,” he said, reported the Australian Financial Review. “In fact, some have already started leaving the berths.”

Senior legal representative, Yaseen Shariff, who made a submission on behalf of the federal workplace minister said, “As we speak, ships are being turned away.”

“It is happening now,” he said. “In Western Australia, the only source of liquid fuel supply, [shipping] is either in the process of being curtailed right now or been reduced. That’s extraordinary.”