Pilbara IR test for government

THE timing of the first strike action at Rio Tinto Ltd's Pilbara iron ore operations in 16 years is almost exquisite, with some of the highest paid union members on the planet stopping work as world leaders were seeking to avert a global financial disaster.

Just how much the world has changed in one year can almost be encapsulated by the resumption of strike action in the north-west.

Emboldened by a new federal Labor government, which is unwinding the previous government's WorkChoices reforms, the unions are thumping the table loudly, with some observers warning of a return to the days of industrial unrest in the Pilbara.

Unions have noted the huge price spikes in iron ore, which has more than doubled over the past three years, and want a piece of that.

And they have chosen the same week as the two-day Australia Japan Business Council meeting in Perth to deliver their message.

The meeting, according to industry sources, is the traditional start of negotiations over iron ore prices.

Last year was a seller's market, but 2008-09 is different. Commodity prices are on the wane, demand is easing, and any threat to WA's reputation as a reliable supplier might be a major component of the talks.

Opposition workplace relations spokesman Michael Keenan reckons the level of industrial unrest under Labor contrasts with the coalition's successful re-establishment of Australia as a reliable trading partner.

Mr Keenan is not the only one who will view the Pilbara as a test of just how well Kevin Rudd can control the IR genie he released in last year's election campaign. The construction industry is another sector fearing what will happen if union militarism is no longer kept under control.

However, Mr Rudd has previously made clear how important the mining sector is, and with a global meltdown and a $20 billion emergency infrastructure spendathon, it is unlikely national Labor wants to see protracted interruptions to the flow of ore royalties to its treasury.

Arguably, too, there are plenty more deserving than Pilbara train drivers, who Rio Tinto says earn between $160,000 and $210,000 a year, averaging $180,000.

The simple truth is, of course, that the rail system is easily disrupted, with Rio Tinto employing just more than 300 drivers out of a direct and indirect workforce of 12,000 people.

The Construction, Forestry, Mining and Energy Union prompted the 12-hour strike action last Saturday, which they have threatened to follow-up with another four-hour stoppage on Friday.

It wants to represent all workers in negotiations with the company. Rio Tinto says it wants to talk directly with the workers and will not deal with the union.

Both sides say the matter is non-negotiable.

Gary Wood, secretary of the CFMEU's mining and energy division, warned that looming industrial upheaval in the region was inevitable if Rio Tinto continued its refusal to negotiate with the union.

Mr Wood said the union's claims were more than reasonable and designed to offer Rio Tinto's locomotive drivers a more modern and flexible arrangement.

But an angry Sam Walsh, CEO of Rio Tinto Iron Ore, seems unlikely to buy into that argument, stating in a memo to all his staff that a small group of people was acting with particularly irresponsible timing.